Corona and Its Consequences - Europe at the Crossroads!

In Europe, too, the consequences of Corona are devastating. The virus destroys and threatens the existence of countless people and enterprises. To help people in need, to act in solidarity is a commandment of humanity – also for the EU and its member states. Equally, every person is required to contribute his or her share and take on personal responsibility. The success model of the social market economy and the EU are also based on these basic principles: subsidiarity and solidarity.

It is necessary to keep the damage for society a low as possible. Of course, the individual states and the EU have the responsibility and must do everything to protect the population and help the people and enterprises affected by the crisis. Especially, since the effects of the crisis will be felt for a long time. Immense amounts of tax monies are used to cope with its effects. Countries take on new debts and additional liabilities.

But especially during the crisis it is necessary to keep a cool head and find sustainable solutions. Public funds and resources have to be applied as efficiently as possible. Even in Corona times, the utilisation of tax funds must be monitored in order for the aid to really arrive where Corona caused damages. Whoever wants to abuse Corona to obtain aids by fraud must know: Theses tax funds will have to be repaid.

Winston Churchill is credited with the following quote: „Never waste a good crisis!” When looking at the demands and resolutions reached at the EU summit in July 2020, unfortunately this quote seems to fit perfectly. Because for years now the EU Commission and large parts of the EU Parliament have been demanding own revenue in order to finance the EU budget and enlarge the existing one. In this context it has been discussed time and again that the EU should also be able to take on debts.   

Under the cloak of fighting the Corona economic crisis the supporters of EU debts and EU taxes seem to be about to reach the goal they have been striving for so long: The European Council has decided to take on 750 bn. Euro in joint debts. And this, although the EU funds and programmes at hand (e.g. EIB, ESM SURE) have not been used up, and, considering the extension of the ECB bond purchasing programmes and the suspension of the Maastricht criteria, enough possibilities would exist for the EU countries to finance themselves at “zero interest”. Moreover, it is not transparent which funds thus far have been used in the individual EU countries in order to fight the Corona effects, and which measures paid for by national funds are planned.  

The programme, “Next Generation”, amounting to 750 bn. Euro, arranges for the provision of 360 bn. Euro in loans and 390 bn. Euro in grants for battling the Corona economic crisis.

Additionally, the EU is to receive its own source of revenue: Its own taxes.

Under the pretext of combating the Corona crisis, there is now a push to assert extensive changes in the European finance and tax policy that in the past were unenforceable for good reason. The crisis is to be used to throw basic principles of the EU overboard. The Taxpayers Association of Europe (TAE) urgently warns against communitarisation of debts, Corona bonds, the introduction of additional taxes, tax harmonisation (minimum tax rates), the synchronisation of social security systems, or the uninhibited accumulation of debt by the EU as well as the individual member states. Also, we see a threat to the principle of unanimity in regards to tax and finance issues in the EU. One cannot stress enough: The veto right protects the individual EU member states and their citizens towards unwanted heteronomy by the EU. In this context, we vehemently reject the suggested implementation of majority decisions.
From the viewpoint of the TAE, these significant changes of important basic principles would in the long run divide the EU more than it would unite it.

Instead of advocating the communitarisation of debt, the EU members should first use up all the potentials available and take up measures in their countries in order to get people and enterprises safely through the Corona crisis.

What we are missing in the current discussion are suggestions for institutional reforms of the EU. Have we learned nothing from the BREXIT? Now they say that we need more money to cope with the difficulties. But more money will not solve the problems. To the contrary: Some countries have to pay, others will receive benefits. If this stays like that permanently, and if the receiving countries are not willing to accept changes, conflicts are inevitable.  

Instead of only thinking of financial aids, it is exactly now that taxes and dues should be lowered as well as bureaucracy be reduced. A relief of the population and enterprises unleashes buying power. At the same time the conditions for future growth are improved.  In the EU today there is already too much money, not too little, being redistributed. By international comparison, the citizens and enterprises in most EU member states are already burdened with extremely high taxes and dues, which hinders economic growth and reduces the per capita income of the population significantly. If we allow EU taxes and the taking on of joint debt, the situation of the people and enterprises in the EU will deteriorate further. After all, debts are nothing more than tax burdens pushed into the future for future generations to pay.

With this paper, the European taxpayers’ association wants to offer approaches and suggestions on how the effects of the Corona crisis can be reduced fast, efficiently, and sustainably from the viewpoint of the taxpayers – without driving the EU into debt or introducing EU taxes. 

Europe is at the crossroads! Do we want the EU to be able to take on debt and raise its own taxes? Do we want to get rid of competition – including the competition between different tax systems and rates? Do we want to redesign Europe into a transfer union in which the EU institutions will coordinate (i.e. harmonise) more and more areas and regulate issues – thus causing the EU member states and its citizens and entrepreneurs to lose more and more freedoms? Or will we continue to rely on a liberal market organisation and the social market economy, which have proven themselves in Europe over the past 75 years?

Dowload TAE Paper Corona and Its Consequences - Europe at the Crossroads!


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