6th Dec 2022

EU single market needs tax co-ordination, says Monti

Former EU commissioner Mario Monti gave MEPs an indication of what to expect in his upcoming report on the single market on Thursday (28 January), saying greater market integration must be complemented by "collateral policies" to avoid unintended negative consequences.

In particular, greater tax co-ordination between member states should be considered, said the Italian who formerly ruled over the EU's internal market (1995-1999) and competition (1999-2004) portfolios.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • EU tax decisions require unanimity (Photo: vistavision)

"No one wants to eradicate completely tax competition," he said, as it "disciplines member states," but policymakers should prevent a further breakdown of internal market barriers favouring capital at the expense of labour markets.

Tax policy is touchy subject for many EU governments. Ireland is amongst those that have successfully used its low corporation tax as a means of attracting foreign businesses, with several newer member states adopting similar policies.

Other countries such as Germany complain these low rates hamper the government's ability to raise the necessary tax receipts to provide adequate public services.

As member states strive to bring their budget deficits into line with EU rules, taxes are expected to rise across the union in the coming years. A badly co-ordinated approach to this could accentuate capital flows to low-tax areas at the expense of European citizens, said Mr Monti.

"Perhaps countries in central and eastern Europe might be able to consider a less aggressive tax policy if they at the same time could provide greater labour into the other member states," he said, referring to current restrictions on workers from several newer member countries.


Despite the 1986 Single European Act and subsequent initiatives to promote greater free trade between member states, analysts and politicians tend to agree that the bloc's stated goal of a barrier-free single market still has a significant way to go.

An EU directive intending to liberalise the provision of services across Europe ran into considerable opposition, while the post-crisis environment has seen an increase in political rhetoric on the need to protect national businesses and jobs, led primarily by French President Nicolas Sarkozy.

"The single market has lost considerably its authority and prestige," warned Mr Monti.

He added that the crisis could be used as a springboard to relaunch the internal market, with his report's recommendations set to focus on both methods to do this and methods to make it politically acceptable.

For instance, the report will look at measures to address fears surrounding the services directive and ensuring consumer rights are protected under Europe's digital agenda.

Temporary support measures for European business must not continue indefinitely, added Mr Monti.

"We want to have respect for Keynes but we don't want to shut away Schumpter," he said, referring to two of Europe's most famous economists, the former a strong advocate of recession spending, the latter known for his theories on entrepreneurship and the fall of established companies.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. EU countries struggle to crack Hungary's vetos
  2. Frontex expanding migrant route-busting mission in Balkans
  3. EU ministers in fresh battle on joint debt, after Biden subsidies
  4. EU: 'We'll see' if Moscow actually stops selling oil over price-cap
  5. Bad Karma
  6. Serbia now has no choice but to join EU sanctions on Russia
  7. Hungary's funds showdown in focus This WEEK
  8. EU must break Orbán's veto on a tax rate for multinationals

Stakeholders' Highlights

  1. European Committee of the RegionsRe-Watch EURegions Week 2022
  2. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  3. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  4. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  5. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  6. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022

Join EUobserver

Support quality EU news

Join us