MALTA: Jurisdiction stands by EU veto but will ‘engage constructively’ in talks.

As published on timesofmalta.com, Tuesday 30 August, 2022.

Malta is standing by the veto system of the European Union but says it will “engage constructively” in any future negotiations, after the German chancellor said he supported ending vetoes on foreign policy and taxation.

A spokesperson for Foreign Minister Ian Borg told Times of Malta that EU treaties were clear on this matter and that any changes needed all member states to agree.

He was contacted after Germany’s Olaf Scholz said that he supported ending vetoes for EU countries in the areas of foreign policy and taxation to speed up joint decision-making.

As new members joined the European Union, Scholz said that he “proposed a gradual transition to majority voting in common foreign policy, but also in other areas, such as tax policy”.

“The treaties of the European Union are unequivocal on such issues and any change thereof requires the unanimous approval of all member states. The Maltese government will engage constructively if and when the negotiations start,” the ministry spokesperson said.

“In the meantime, the government remains steadfast in its commitment to respect its constitutional obligations and the positions taken by the national parliament.”

The European Commission early in 2019 kick-started a debate on reforming decision-making for areas of EU taxation policy, which currently requires unanimity among member states.

Malta and a number of other small states have traditionally opposed any move towards tax harmonisation on an EU level.

Then finance minister Edward Scicluna had told Times of Malta at the time that he believed “the veto removal regarding taxation in the EU is essentially a red herring”.

Amid global moves towards tax harmonisation, Finance Minister Clyde Caruana last April announced that a new tax regime would be in place by 2025, in a major overhaul of the current system.

He said the time had come to revamp the financial services industry by putting in place a new corporate tax regime to replace the existing one, which he said was drawn up over 20 years ago by then finance minister John Dalli.

Malta has signed up in principle to an OECD-led global tax reform that would ensure multinationals pay their fair share wherever they operate.

Reacting to Scholz’s statement, PN spokesman Peter Agius said he disagreed with the (German) stance and will oppose it vehemently to ensure that the EU respects the needs of all its peoples.

The needs of the Maltese are different to those of Berlin or Paris, he contended.

Meanwhile, EU experts believe that what Scholz was proposing is “highly unlikely to happen”, at least in the short term.

“The replacement of unanimity with majority voting requires a unanimous decision among all member states or an outright treaty change,” one expert said when contacted and on condition of anonymity.

“Unanimity has long slowed or blocked the EU in acting decisively in foreign affairs and this has weakened its ability to act in the eyes of the public.

“Removing unanimity would make for swifter and better decision-making and a stronger EU in the world, which is currently dominated by large actors such as the US and China.

Traditionally, the EU has been strongest in those areas where it moved to majority voting (such as single market) and weakest in those areas where it has kept unanimity, he noted.