SPAIN CLAIMS ONE BILLION EUROS LOSS TO ROCK TAX REGIME

The Spanish Government yesterday stepped up its campaign of unsubstantiated accusations against the Rock by claiming that Spain was losing out on one billion euros in taxes every year because of Gibraltar’s fiscal regime.

The spectacular claim was made by Iñigo Méndez de Vigo, Secretary of State for the EU at the Spanish Ministry for Foreign Affairs, in a lengthy interview on Gibraltar published by the right wing newspaper ABC.

It came after a week of aggressive, one-sided reporting on Gibraltar across much of the Spanish media.

 In the interview, Sr Méndez de Vigo said Spain had urged the European Commission to probe Gibraltar’s tax regime over concerns that aspects of the fiscal framework here could constitute illegal state aid.

In making the claim, he failed to recognise that the Commission had already looked at Gibraltar’s tax regime and cleared it as compliant with state aid regulations.

“The Ministry for Public Finances calculates that the current tax regime in Gibraltar generates losses to the Spanish treasury of close to one billion euros annually, in the form of lower returns on different types of taxation,” he told the newspaper.

“The wellbeing that Gibraltar currently enjoys – on the back of its tax regime and special status – cannot continue based solely on an economy that is clearly harmful to Spain and other EU member states.”

During the course of the wide-ranging interview with Luis Ayllon, ABC’s diplomatic editor, Sr Méndez de Vigo moved from one key issue to another and set out the Spanish line in firm terms.

He said the Spanish Government had, from the start of this current legislature, complained to the European Commission about ‘tobacco smuggling and money laundering in Gibraltar’.

He claimed the findings of the recent OLAF report supported Spain’s claims and showed that the EU’s financial interests were being damaged.

“It’s clear that the enormous quantities of tobacco that have been shown to be imported into Gibraltar are subsequently illegally introduced into Spain,” he said.

“The controls at the border have been reinforced and will continue in place, given that the seizures of contraband cigarettes have increased notably as a result.”

Asked about the Commission’s description of Spanish border controls as ‘disproportionate’, Sr Méndez de Vigo said Gibraltar was outside Schengen and the EU customs union.

Citing Spanish Foreign Minister Jose Manuel García-Margallo, he said the controls ‘are not an option, but an obligation’.

He said the Commission had backed the legitimacy of the controls and had found them to be disproportionate ‘only’ on June 11 and 15.

The Commission “in no way” considered the Spanish checks to be disproportionate in general terms, “as I have read in some places”, he said.

Responding to the criticism that Spain had been slow to implement changes at the border, Sr Méndez de Vigo said works would start imminently on an EU-financed E5.3m overhaul of the border area.

He said this would include installation of Automated Border Controls and licence-plate recognition systems.

Sr Méndez de Vigo was asked to comment on the Commission’s recent findings that Gibraltar had not breached on EU rules in creating its artificial reef, allowing bunkering or reclaiming land from the sea.

“The dropping of the blocks was a unilateral and unfriendly act and every responsible politician should be aware of the consequences of that type of action,” he replied.

On bunkering, he said Spain had successfully legislated to stop the use of ‘floating petrol stations’, a reference to the permanently anchored tankers once used by some local suppliers.

On reclamation works, Sr Mendez de Vigo said Spain had repeatedly complained to the British Government and to the Commission and would continue to do so.

Despite the Commission’s recent findings, he said Spain considered such reclamation to breach EU directives on nature protection and development.

“The process is not concluded and Spain reserves all the options that are at its disposal within the EU sphere to avoid actions that are contrary to the protection of the marine environment,” he told ABC.

Sr Méndez de Vigo was asked to comment on Gibraltar’s claim that Spain had not responded to requests for cooperation on tobacco smuggling.

He responded by reflecting on the trilateral process – it was an ‘unbalanced’ mechanism that even the PSOE had realised ‘did not work’ – and on the prospect of ad hoc dialogue.

“I hope that in the coming months we will be able to put in motion the mechanism of ad hoc groups, which could be useful to resolve problems that affect people daily,” he said.

“It would be positive for the European Commission to back these meetings.”

“In any case, issues related to sovereignty would be excluded from these groups as this is something that must be discussed bilaterally between the government of the United Kingdom and Spain, without the presence of local authorities from either side.”

Finally, Sr Méndez de Vigo reflected on the impact of the tensions over Gibraltar on relations with Britain.

He said the Spanish Government had been puzzled by recent reactions from the British Government on Gibraltar-related issues, including the recent summoning of the Spanish ambassador over a shipping incident.

He said this step had been ‘disproportionate and lacking in sense’.

He added that officials in Madrid had also been surprised by a Foreign Office statement that referred to a conversation between Prime Minister David Cameron and his Spanish counterpart Mariano Rajoy which, according to Madrid, never happened.

“Spain and the United Kingdom are partners and allies, they share principles and values and are active players in the process of building Europe,” he said.

“It would be good if these types of incidents did not distract us from the essential things, which is the future of the EU and our role in global governance.”