Companies with a turnover of more than 750 million euros worldwide must pay a European tax if it is up to the European Commission. It concerns 0.1 percent of the turnover. In this way, Brussels hopes to raise about ten billion euros.
It is one of the proposals that the European Commission is presenting today to mitigate the economic consequences of the corona crisis. France and Germany had already come up with plans (for 500 billion euros) and this weekend, the Netherlands and Austria, among others, launched a proposal (without amounts).
The accountants in Brussels are looking for money and are thinking of their own resources. To date, the European Commission itself has no taxation.
Plastic charge
The plans of the Commission refer to several European taxes, with the tax on the turnover of large companies yielding the most money. A levy on plastic and a tax on CO2 emissions are also being considered.
But that is not nearly enough, so it will be proposed to slightly increase the multi-annual budget. The Netherlands opposes this with the other ‘economical’ countries (Austria, Sweden and Denmark).
The committee will also come up with plans to distribute expenditure differently: less money for traditional sectors such as agriculture and regional funds and more for sectors that have been hit hard by the corona crisis.
With the budget in hand as collateral, the European Commission wants to borrow money on the capital markets for a reconstruction fund at favorable interest rates. Money that can subsequently be borrowed or obtained by needy Member States in Brussels.
Strict conditions
A few weeks ago, European leaders asked Commission President Von der Leyen to draw up a plan for the European Union to emerge from the crisis. The southern Member States in particular asked a lot of money, EUR 1500 billion, and the European Parliament even wants EUR 2000 billion.
The Dutch cabinet finds these amounts a hit and demands substantiation. That analysis also comes today, indicating for which sectors and regions the money is needed.
The conclusion will be that money is needed immediately to get the economy going. But no plan will deliver money tomorrow, so the European Commission is going to ask Member States to increase the current budget, so that from September onwards countries in need can also borrow or in some cases get money.
When there is a loan or a gift, will be announced later today. Italy and Spain do not want loans with strict conditions. They receive support from Germany and France, while the economical countries led by the Netherlands believe that loans can indeed be linked to conditions for strengthening the economy. In addition, they want the guarantee that the money will not be used to pay off past debts.
Subscription to the internal market
Carsten Brzeski, chief economist at ING Germany, thinks a fair amount of money will be donated. “It is political solidarity, otherwise you run the risk that growing economic differences will lay the foundation for populism and anti-European sentiment.”
Coen Teulings, the former director of the Central Planning Bureau (CPB), sees the plan as a kind of development aid. “Debt is not good for Italy. Of course, a country like Japan also has a lot of debt, but that country has no mafia. Italy is poorly managed, neglected. It is not the corona that kills Italy. But we also have the country economically seen needed. ” Teulings reminds that also when receiving a gift, conditions are imposed on how the money can be spent, and therefore how not.
Economics professor Paul de Grauwe (Leuven and London) says that emergency breaks laws. “Sometimes the shocks are so great that you have to put rules aside. Cicero said it all: people’s prosperity is the highest moral law.” And so he provides a compromise of credits and gifts. “There is endless possibilities.”
Paul Tang (PvdA) is particularly enthusiastic about the Commission’s plans to levy a European tax. “They all take advantage of the internal market, earn their money there, and then it may be something in return. It is not a European tax, nobody gets a blue envelope from Brussels. It is much more a subscription to the internal market.”
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