A series of broken promises, from COVID-19 to climate finance, are undermining trust in the EU.
Much has been said and written about the converging crises of COVID-19, conflict, and climate change. Less has been said, however, about the credibility crisis that is hurtling towards Brussels and the European Union.
The past two years have underscored that, in a global crisis, EU Member States increasingly turn to the EU. Unfortunately the Member States have not set the institutions up for success. Despite a strong political commitment to lead internationally, the EU’s budget for external action is unable to meet the scale of the challenges facing the world today.
The EU urgently needs new resources capable of meeting the moment.
Securing these from Member States is going to be difficult with the cost of living crisis biting across the continent — although Member States must step up, too. There are, however, other proposals that, if adopted, could bring about a stepchange in ambition and progress.
Later this year the European Commission will publish a proposal for a new set of “own resources” — options for raising revenues that would go directly into the EU budget, rather than national purses. It is through this process that the EU can take concrete steps to avoid a credibility crisis.
An international tax on financial transactions has been long debated, but never yet agreed, at EU level.
The proposal is both simple and attractive: given the scale of transactions in financial markets, all that is needed is to apply a tax at an extremely low rate to raise significant tax revenues, without affecting the functioning of the markets.
In 2013, the European Commission estimated that a Financial Transaction Tax (FTT) implemented by just 11 Member States participating in an Enhanced Cooperation Procedure could generate between €30-35 billion annually.
With this idea once again gaining international traction as a means to rebalance the harmful effects of globalization, the EU should play a leading role in delivering such a game-changing agreement, and an ambitious proposal must therefore be central in a new basket of own-resources.
This is just one example. The EU must agree a broad package of new revenues, ensuring that there are sufficient funds in the EU budget to meet the challenges ahead.
During exceptional times we need exceptional measures. Everyone must pay their share —‚ from industry (through windfall taxes on excessive profits), to investors (through an excise duty on share buy-backs), and the wealthiest in society. Anything less will be sure to undershoot in terms of the scale of ambition needed to address today’s global challenges.
Furthermore, the package should also introduce a new principle: that once Next Generation EU debt has been paid down, a large portion of new revenues should be allocated to the fight for climate justice and development.
This would ensure sufficient EU financing for the fight against extreme poverty and climate change and to support low-income countries in the face of the disruptions for which wealthy economies are mainly responsible.
Source: Global Citizen