MBB Permanent Delegate Omar Cutajar chaired a round table discussion on Financial Services with prospective MEP candidates and industry representatives
Tax policy provides small jurisdictions like Malta with the only possibility of gaining competitive leverage. This is why it should remain an area of national competence. Is the protection of a successful sector reason enough for MEPs to go to the extent of defying their peers within their political grouping in the European Parliament? How do the national interest and MEPs’ political ideologies balance out? These were some of the issues discussed between practitioners from the financial services industry and MEP candidates in a frank roundtable debate held today at Europe House – one of a series of information events being organised by the European Parliament Information Office.
Following the economic crisis, the financial services industry quickly came under fire. Decisions had to be taken to support the banking sector and eventually to ensure that the proper safeguards be put in place to avoid a similar meltdown in the future. This scenario dominated the EU’s agenda in the last 5 years. Meanwhile, the banking sector in Malta remained relatively strong, thanks to a traditionally prudential approach and a solid regulatory framework, and the financial services industry in general was not badly hit compared to elsewhere in Europe where governments had to step in to save ailing operators. Buliding on the success achieved in this field in the past twenty years, Malta has been opposing proposals for a Financial Transaction Tax (FTT) and a Common Consolidated Corporate Tax Base (CCCTB).
“The FTT will simply force firms to move out of Europe to avoid the extra costs. It should be seen in a global perspective, where the EU is losing out to other major competitors in the financial services industry. The CCCTB also eradicates Malta s only edge in the market, obtained through a solid regulatory framework and adequate tax incentives”, argued Austin Demajo from Grant Thornton.
There seemed to be a consensus in this regard amongst PL and PN MEP candidates. “We should be proactive in protecting our interests. If need be, we should not feel bound to positions taken by our respective political groups”, said PL candidate Cyrus Engerer. He was reacting to Alternattiva Demokratika’s Arnold Cassola, who defended the Greens’ position on the matter.” The FTT exempts SMEss, and therefore most Maltese operators would not be affected. Pension funds are equally exempt. We are in favour of these taxes as they aim to counter speculation”, Cassola maintained.
PN candidate Ray Bugeja emphasised the need for better self-regulation and called for decisions to be driven by technical expertise. He echoed PL’s Ivan Grixti, who added that investor education is key in ensuring the appropriate level of consumer protection. “Our involvement in the debate leading to the elections should be an educational exercise in itself”, Grixti said.
Finance Malta Chairman Kenneth Farrugia referred to the huge burden regulation puts on smaller operators, which the Maltese industry is mostly made of. Reporting obligations are the same for Malta as they are for multinationals in big countries, he said. “In Malta, 90% of the market is made of SMEs who find it very difficult to keep up with these obligations. This is where MEPs become important in relaying this reality at the appropriate decision-making levels. The devil is in the detail and sometimes MEPs could be crucial in advancing a strong position on sometimes very specific provisions in the proposals before them.”
Kevin Cutajar, PN candidate, also referred to the problem of over-regulation. He said that for a proper balance to be reached, MEPs need to consult regularly with representatives from the industry as they are the ones who ought to push the specificities of Malta to be taken into consideration when decisions are taken at EU level. In this regard, “the consumer is an integral actor and his voice should be strengthened”, he said.
Aldo Scardino from Bank of Valletta remarked that regulators should always ask whether the consumer is better off.
In conclusion, Peter Agius, Head of the European Parliament Information Office, pointed out that the most influential MEPs are often those who act on a European dimension and then use such influence to advance the interest of their electorate. Summing up a common theme expressed by most participants, Agius said that at national level, the possibilities of national scrutiny of EU law should be better utilised, whether through national Parliaments or consultation with civil society.
The discussion was moderated by Omar Cutajar from the Malta Business Bureau.
For more information on the Joint Business Manifesto click here