Saturday

25th May 2019

Economic guru calls for tax harmonisation to save single market

  • Former commissioner Mario Monti advocated a compromise economic model at the Brussels Economic Forum on Thursday (14 May) (Photo: European Commission)

A compromise deal between the EU's 'Anglo-Saxon' and 'social market' economies is the best way to secure Europe's future economic strength and social stability, says former EU competition commissioner Mario Monti.

Speaking at the Brussels Economic Forum on Thursday (14 May), an annual meeting point for some of the globe's most influential economic policy makers, Mr Monti added that the current crisis provided an excellent opportunity to secure such a deal.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"To avoid frustration in both groups of countries resulting in resentment against Europe generally and the single market specifically, the EU should, in my view, grab this chance that was not there one year ago," he said.

The Anglo-Saxon economies of the UK and Ireland, together with many new member states, have in the past voiced their frustration with continental countries such as France for failing to comply with single market rules, such as competition and state aid requirements.

Conversely, countries that provide greater social benefits often begrudge the low-tax, low-spend countries for their long-standing opposition to any form of tax co-ordination.

They argue that low corporate tax regimes such as that seen in Ireland constitute little more than a race to the bottom, promoting companies to base themselves where taxes are lowest and subsequently denying other governments the vital tax revenues necessary to support their social objectives.

To reconcile the two sides says Mr Monti, the EU should propose a strategic pact with two chief components.

"The first would be a renewed binding commitment to the single market, including strengthened enforcement mechanisms and initiatives with deadlines to implement the single market in areas where it is still lacking," he proposes.

The second measure would consist of a limited system of tax co-ordination between member states.

French Socialist MEP Pervenche Beres, chair of the parliament's influential economic affairs committee, later told EUobserver that the current discussion was reminiscent of the debate surrounding the Bolkestein services directive leading up to the European elections in 2004.

"If nothing is done [to harmonise member state tax regimes], the sustainability of internal market logic as it is currently built will be less and less," she said.

A question of sovereignty

Securing a deal on taxation at the European level requires a unanimous decision by member-state governments, some of whom hold their sovereign right to set tax levels as absolutely sacrosanct.

The Irish government is currently seeking a legal guarantee to ensure the Lisbon treaty does not weaken its control over the area.

However Jacques de Larosiere, a former governor of the Bank of France and chairman of a EU high-level group on financial regulation, also called on governments to co-operate while speaking at the Brussels Economic Forum.

His group's recent report says the EU's current supervisory committees on banking, insurance and securities should be beefed up with new powers, enabling them to force national regulators to intervene when financial organisations such as large banks take on too much risk.

Like Mr Monti's proposal on taxation, this would require a handover of national powers to supranational structures.

"If, in 2009, Europe is not able to surmount its differences and get together on this modest compromise then forget about it," said Mr Larosiere.

Member state willingness to adopt pan-European solutions will shortly become evident.

At the end of this month the commission will come forward with concrete proposals for a European supervisory framework, largely based on the Larosiere report.

A few weeks later at the June European summit, EU leaders will then decide whether the proposals will make it into EU legislation or are destined to join the multitude of other reports gathering dust on a commission shelf somewhere.

"The image of Europe is that we can't agree on anything," warns Mr Larosiere. "If we can get our act together we will have much greater credibility."

EU top court backs Canada trade deal in ruling

The European Court of Justice ruled on Tuesday that the EU-Canada free trade agreement, and its controversial dispute settlement mechanism, is in line with the bloc's rules.

EU and Japan in delicate trade talks

The Japanese PM comes to Brussels to discuss the first results of the new EU-Japan free trade deal, plus WTO reform - a sensitive topic before he moves onto Washington to face Donald Trump.

News in Brief

  1. UK's May announces June 7 resignation date
  2. Ireland votes for EU election and divorce referendum
  3. Report: May to announce resignation plan on Friday
  4. Leading politicians: time for EU to have female leaders
  5. Poll: Finland's Green party to surge in EU elections
  6. High demand for postal voting in Denmark
  7. Some EU citizens turned away at UK polling stations
  8. Switzerland unlikely to sign draft EU deal

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Latest News

  1. EU election results to trigger top jobs scramble This WEEK
  2. Don't tell the Dutch - but Timmermans 'won'
  3. EU says goodbye to May with 'respect'
  4. Strache scandal: how big a hit will Austrian far-right take?
  5. Italy train row exposes competing views of EU
  6. Dutch socialists on top in first EP election exit poll
  7. No usage data kept for EU parliament's 'Citizens' App'
  8. EU sanctions regime cannot be an 'EU Magnitsky Act'

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us