A years-long battle with the European Union has ended up in what can be considered as an enormous victory for Malta.

Last Tuesday, the Maltese government concluded negotiations to ensure that Malta retains a zero Value Added Tax rate on medicine and food, which would have otherwise have had to carry a rate of not less than five per cent.

In the run-up leading to EU membership, Malta had reached a deal to keep food and medicine at zero VAT rate until the end of 2009, but two years ago there had been agreement to extend the derogation until the end of 2010 while negotiations on a long-term deal were held. Now, the deal has become permanent. If no accord had been reached, the government would have been obliged to introduce a VAT rate on food and medicine as from 2011.

The decision taken on Tuesday – that Malta retains a zero VAT rate on food and medicine – is by and large a huge political victory for the Nationalist Party and government.

At a time when the world is facing so much turmoil and so much work needs to be done to keep the economy going, the introduction of VAT on food and medicine would have meant added expenses for Maltese families and a reduction in the quality of life.

Food and medicine cannot be considered as luxuries. They are everyday requirements for each and every one of us, and having to pay more for them would have increased our expenses exponentially. Many families would have had to renounce to other commodities in order to make up for the added costs they would have had to face if VAT was introduced on items they need to buy and consume every day.

No doubt, the Labour Party would have had a field day in attacking the government if it had lost this battle. The PL is known for its strong defence of consumers when it comes to cost of living matters, and a negative decision would have given Labour so much to talk about and so many fingers to point. Now that the matter has been resolved positively, the PN can boast of having obtained a victory for Malta as a government and a political milestone as a party, while Labour can only acquiesce and admit that all the Maltese stand to benefit from such an important decision.

Considering that the Maltese government has had to persuade the other 26 EU member states on such a delicate issue, and considering the resistance that Malta has had to face ever since it began negotiating the matter, it is no wonder that Finance Minister Tonio Fenech sounded so satisfied when he spoke to newspapers about the deal on Tuesday.

Malta’s argument was solid, in that it was based on the fact that it was not the only member state that had made such a request. In fact, two other countries, the United Kingdom and Ireland, had both successfully negotiated a permanent deal not to have VAT on food and medicine, while Sweden has no VAT rate on medicine.

For Malta to have bound the zero VAT rate on food and medicine until the UK and Ireland keep theirs is a very strong point. One cannot imagine that the UK and Ireland will introduce a VAT rate on food and medicine anytime soon, and therefore it can be said that Malta has made a great step forward in maintaining a similar structure for many years to come.