GIBRALTAR: Opposition parties split on tax treaty.

As published on chronicle.gi, Friday 5 June, 2020.

Gibraltar’s opposition parties were split in their reaction to Thursday’s debate in the Spanish Congress on the tax treaty for Gibraltar and Spain.

The official Opposition, the GSD, repeated its stern criticism of the treaty, insisting it is bad for Gibraltar and dismissing the Spanish Government’s conciliatory language on transparency as “a smokescreen” for its true position.

Conversely, Together Gibraltar welcomed the Spanish Government’s “conciliatory and constructive” tone and said that while the treaty was “imperfect”, it represented a step in the right direction toward normalised relations.

Both parties were reacting to a debate in the Spanish Congress that exposed clear divisions on how Spain’s main political parties view future relations with Gibraltar.

Whereas the parties on the right, the Partido Popular and Vox, described Gibraltar as “a parasite” on the Spanish economy, the Spanish Government and the Socialist group spoke of cooperation, transparency and “an outstretched hand” as Brexit looms, and even while maintaining their criticism of Gibraltar’s finance centre.

Spain’s Foreign Minister Arancha Gonzalez Laya said her government had not renounced its sovereignty aspirations over the Rock and that the treaty would enable it to regain “tax sovereignty.”

The GSD said the arguments deployed by the Spanish minister illustrated why this was a bad deal for Gibraltar.

The GSD said the agreement was “intrusive and harmful” because it affected Gibraltarians detrimentally “even when they don’t actually live in Spain.”

According to the Opposition, the agreement is not fair unlike other international double taxation treaties and will make Gibraltar less attractive to investors.

It said the treaty has “serious legal effects” on people and companies and creates new tax rules and burdens that are not present in a conventional double tax treaty. Substance, it added, is more important than any “perceived recognition” of Gibraltar by Spain.

“Right wing parties in Spain concentrate on the alleged recognition of Gibraltar as a reason, in itself, for rejection of this Treaty,” said Keith Azopardi, the Leader of the GSD and Leader of the Opposition.

“This completely misses the point which the Spanish Government itself is pursuing.”

“The arguments used by the Spanish Government demonstrate that Spain views it as a tool to beat Gibraltar, to ensure that investment is discouraged and that people who use Gibraltar are treated as if they were in Spain for tax purposes.”

“They continue to use the language of corruption, crime and fraud and portraying Gibraltar in a bad light as if, by implication, we tolerate fraud and crime.”

“The conciliatory language on transparency is a smokescreen. Spain continues to use language that makes it clear that it does not accept Gibraltar as a modern finance centre. Despite regulatory compliance for decades by Gibraltar they are still using the same language.”

“Spain needs to treat Gibraltar with respect and accept and recognise our rights. Only then will it be possible to contemplate a new era.”

Mr Azopardi said the GSD would set out its concerns about the treaty later this month when debating a motion in the Gibraltar Parliament.

“One thing is for sure though that we will present that debate in a robust, forceful but proper and respectful way,” he added.

“We have many differences with the Government. We think this is a bad Treaty and a mistake. We will explain why.”

“But we are not going to see in our Parliament a debate of the wild and shrill tone that we have just seen in the Spanish Parliament."

Marlene Hassan Nahon, the Leader of Together Gibraltar, was less critical of both the treaty and the Spanish Government’s intervention in Congress on Thursday morning, although she nonetheless voiced some reservations about the treaty.

“We must acknowledge that we are living in a global climate in which transparent, amicable and collaborative fiscal and economic practices are more important than ever,” she told the Chronicle.

“In this light, normalising our relationship with Spain via a tax treaty, thus strongly eroding Spain’s claims against Gibraltar's economy, is a positive step.”

“We understand that some concessions must be made so that progress can be made on this front, but the positions expressed by the Spanish right wing, harshly criticising the treaty as damaging to Spain's interests, indicate that Spain is also making significant concessions in the recognition of our sovereignty and financial fair play.”

“It must also be noted that, with the looming threat of Brexit on the horizon, it is comforting to hear the Spanish foreign minister's conciliatory and constructive tone, based in the pursuit of common prosperity and good relations.”

“As long as Gibraltar's sovereignty is never jeopardised, TG will always support balanced and measured steps aimed at fostering better cross-border relationships, and unlike the GSD, we understand that progress on this front requires mutual concessions.”

“This treaty, though imperfect, is a step in the right direction.”

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