Malta has registered more progress in economic terms when compared to the advanced European Union member states; of course, when compared to countries who are still catching up with the rest of the union, Malta has not done so well but

this is understandable, Parliamentary Secretary Tonio Fenech told Parliament on Monday night.

He was answering questions put forward by acting MLP leader Charles Mangion, after Prime Minister Lawrence Gonzi’s ministerial statement on Malta’s adoption of the euro.

Dr Mangion stated that competitiveness has decreased, as has average compensation for workers, to which Mr Fenech replied that the former has increased. The investment Malta is attracting from abroad is evidence of this.

Mr Fenech deplored the MLP’s media campaign which, he thinks, is trying to make people believe that euro adoption has led to an increase in the cost of living and that retailers are thieves. He admitted that there was no denying that international factors are making prices higher, and, with regard to euro changeover abuse, several establishments had been forced to remedy the situation.

Nationalist whip Mario Galea asked whether Monday’s l-orizzont editorial was right in saying that Cyprus had been given five months more leeway for the people to get rid of their old currency. Mr Fenech said this statement was categorically false. Comparing euro adoption in Malta to that in Cyprus, to answer Nationalist MP David Aguis’s question, the parliamentary secretary said statistics indicated that Malta has had a smoother transition than Cyprus. “People are enthusiastic and things have progressed. We predict that come Wednesday everyone will be using the euro in their transactions.”

Taking the floor again, Dr Gonzi reprimanded Dr Mangion for saying the cost of living had increased when it was he who said that for the good of the country it should be increased by 10 per cent with the devaluation of the lira, meaning that Lm100 would actually be have been worth Lm90.

The price of oil has exploded to $100 a barrel and it is likely to go up to $130 a barrel. The price of cereal is also increasing. “We have challenges ahead, and are being honest with the people.” He also accused the Labour Party of not having faith in the country – “you have an outlook of national inferiority”.

As to Dr Mangion’s doubt that the NECC will replace the Consumer Protection Department when it is transformed into an agency as the government is proposing, Dr Gonzi illustrated how the aim of the committee is to ensure that there will be no price increase because of the changeover to the euro – making certain that the consumer is getting a fair deal.

NECC is a tripartite - there are unions, employers, and social partners which were involved in its work.

The Prime Minister ended by proudly praising the country for the remarkable step forward. “We have dealt with the challenges in the past three years, and following this government’s policies, the country has managed to achieve success. With diligence we can take this country forward.”

Income Tax Management (Amendt) Bill – Bill 114

(2nd Reading)

Presenting the second reading of the Income Tax Management Amendment Bill, Mr Fenech described how the amendment will regulate certain powers held by the Commissioner of Income Tax, so that he will be able to give certain information to other country’s taxation authorities, to ensure that investments or transactions are not doubly taxed - ie. in Malta, and in the particular country this might take place. The Commissioner will not be asked for information about everyone. A formal request for the information will have to be made. These provisions do not affect Maltese taxpayers, or the authority of the Commissioner over them. These provisions are limited to foreigners with investments in Malta. Information shall be given to authorities from countries with which Malta has a double taxation agreement.

The amendments are considered preventative measures to deter one from committing the aforementioned acts, the parliamentary secretary said. “They are based on principles outlined by the OECD, an international organisation that outlines international taxation principles. It is therefore important that these are adopted.”

Dr Mangion, mentioning the government’s plan for reaching a double taxation agreement with the US, said it would further the aim towards making Malta a stronger financial services centre. The country is working towards exchanging its offshore status for one as a financial services hub that is in line with international standards. To do this, competent workers and solid internationally recognised foundations were needed. “These were the ingredients for advancement in this sector.” He also felt that this sector should serve as a model for other economic sectors, to develop new areas of investment.

Dr Mangion commended the fact that information will only be shared with those with whom Malta has a double taxation agreement. He also considered it a good thing that the principle will work along the lines of reciprocity.

Concluding, Mr Fenech thanked the opposition for working towards the same aim. “The more we are able to maintain consensus the more positive effects we are able to garner from this sector.”

The Bill will now pass to Committee Stage.

Early in the session Justice and Home Affairs Minister Tonio Borg offered his and the parliament’s condolences, following the death of former Labour MP Robert Naudi, on 2 January. Labour whip Joe Mizzi and the Speaker of the House also expressed their solidarity with Dr Naudi’s family.