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Anna Mallia | Wednesday, 25 February 2009

The Euro fat cats

The race for the election of the MEPs is on: being a member of the European Parliament is a luxury, more than a mission. In England they are estimated to have earned one million sterling in one five-year term, and in Malta this newspaper last Sunday revealed how much our MEPs earn from Brussels, or rather from the taxes that we pay to Brussels.
MaltaToday reported that our MEPs receive yearly a daily subsistence allowance of €287, €48,624 yearly as general expenditure allowance, and €202,968 – yes right, two hundred and two thousand, nine hundred and sixty-eight euros – for assistants’ salaries. It is a breath of fresh air to learn from this newspaper that the Nationalist Party will be moving to see that their contestants bind themselves to respect the rules by signing a written agreement in order to ensure transparency.
Last Sunday, even the Times of London reported how easy it is to make a million pounds sterling in five years when you become a Euro MP. It was reported that all MEPs have full, free accident insurance, travel insurance and life assurance. They and their families get money for spectacles, contact lenses and dental treatment. MEPs and their families can also get full payment for things such as hydrotherapy, mud baths, aerosol therapy and acupuncture.
The MEPs have a huge list of other entitlements that are generously subsidised by Europe’s taxpayers. If they take language and computer courses we pay their fees, travel and living expenses.
Even when MEPs lose their seats in the European parliament, they don’t have to bid goodbye to the financial benefits immediately. Once they leave office they continue to enjoy a “transitional allowance” (basically their parliamentary salary) for anything from six months to two years, depending on their length of service. They can also keep on using the parliament’s subsidized restaurants and cafeterias, libraries and telephone facilities in Brussels, Strasbourg and Luxembourg.
Moreover, once they start drawing their EU pensions, these are subject to special, low EU tax rates and not the usually much higher tax rates in whichever country they may retire to.
In July 2009 the new members’ statute will come into force. By this statute MEPs will get the same salary and would be reimbursed for the real cost of their weekly travel expenses. However these new rules may not be quite as “open” and “transparent” as the EU might like us to believe, commented David Craig of the Sunday Times of London.
All MEPs will receive the same salary, which will be fixed at 38.5% of the salary of a judge at the European Court of Justice. At about €7,000 a month, this will give most MEPs from the wealthier EU countries a large pay rise (30% for the British).
The Italian MEPs will be worst hit by this reform as they previously had the highest salaries. But they managed to block the reform package until their government agreed to compensate them with Italian taxpayers’ money.
Austrian and Irish MEPs too could have been losers but under article 25 of the Members’ Statute, MEPs are free to choose whether they wish to remain on the pre-2009 salary and pensions scheme or move to the new one.
As regards pensions, all MEPs who opt for the new salary scheme will no longer have to pay national income taxes in their countries. Instead they will pay a special EU tax, which for most should be between 13% and 17% depending on their family circumstances.
Family members are banned from working as assistants to the MEPs under the reform but any family member employed as an assistant in July 2008 may remain on the EU payroll until the 2014 European parliament elections.
Regarding travel, the reform says that from July, MEPs’ weekly travel expenses will be paid out only against actual expenses incurred but experience suggests that the more enterprising MEPs will find it easy to get friendly with a travel agent, buy a full-price airline ticket each week, take the receipt page out of the ticker, get a full refund from the travel agent, change the ticket to a low-price alternative and hand in the original expensive, full-price receipt to the parliament bean-counters as part of the MEP’s expenses claims, Craig writes.
Subsistence and constituency offices payments amount to £94,000 a year, and these will continue as before with no need to produce any proof that any money was spent, allowing MEPs to legally make many tens of thousands of euros a year thanks to the EU Parliament lax expenses payment procedure.
The sum of €202,968 remains without guidelines. This means that there are no guidelines regulating how much an assistant should be paid and many MEPs use this allowance to pay members of their own family so that an MEP can employ his or her spouse or son or daughter for €50,000 or €60,000 a year and still have enough money to employ more than one full-time secretary and a few researches.
Each MEP is provided with two fully furnished, rent-free offices in the European Parliament building and an allowance of more than €45,000 a year for having an office in their constituency. No receipts are required. Many MPs claim that their constituency office is in their own home. This allows them to rent out a room in their homes to themselves, paid for with taxpayers’ money. Some take all the cash without having a constituency office at all.
Their daily subsistence of €287 is tax-free and paid for every one of the 40 or so weeks of European Parliamentary sessions without having to provide receipts. There is even no requirement to attend a debate or committee session. On Friday at 7am there is usually a queue of MEPs with their luggage waiting to sign in to get their allowance before rushing off to the airport or station.
This daily subsistence of €287 is meant to pay for accommodation and meals and more MEPs can pocket more than €100 of every day tax-free. A 3-star hotel near the European Parliament costs about €118 a night, including breakfast. That leaves about €170 a day for lunch and dinner and there are subsidised canteens and restaurants.
In addition MEPs get generous travel expenses. They can claim weekly flights from their constituencies. They are not asked how much they have paid but are usually reimbursed for more than a business class fare. By buying cheap tickets MEPs can rake in more than €300 a week tax-free. They also get an allowance of £3,600 a year to go anywhere in the world as long as this travel is “connected” with their work as an MEP.
When the European Parliament took the vote on the extradition of the Italian Cesare Battisti from Brasil on Thursday 10 February, the feast of St Paul, only 54 out of the 785 members of the MEPs were present. Many believe that this is so because the MEPs arrive in Strasbourg on Tuesday in time to sign the attendance sheet even for the Thursday session when in reality they will be absent.
But the scandal in all this two-day work is that the Euro MPs earn €20,000.
But as one Italian journalist commented, notwithstanding all this money, the Italian MEPs for example fly on low-cost at €89 when they, like the other MEPs, receive €1,450 for the trip.
They have one of the best pension schemes in Europe. They get the same benefits as national politicians but can save for an additional voluntary EU pension. For every £900 they pay into their pension scheme each month, the EU will pay double. MEPs are allowed to pay this £900 from their £43,000 office expenses in theory, and they are supposed to reimburse this money from their own bank accounts. But a few years ago they voted down a proposal that auditors should check whether any of them did so. This means an MEP would have to work for only about 15 years to get a pension of half their final salary.
Who said that politics is a mission definitely did not have the European Parliament in mind. And if our MEPs tell us that they do not earn that much, they should take it up with Brussels and not with us, because the rules apply to all MEPs.
Dr Simon Busuttil – are you sure you want to give this all up?


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