Paying more is the answer

Article published on June 13, 2005
community published
Article published on June 13, 2005

This article has not been vetted by an editor at Paris HQ

Mistrust among national leaders is not only to be blamed for the current political crisis but also for the current deadlock over the EU budget. Despite this, leaders realise that only higher taxes will guarantee development.

A quick look at a world map confirms that stable political systems do not exist without sufficient funding: the more developed countries are those with heavier taxation systems, whilst countries with low levels of taxation are permanently in crisis. For example, Argentina’s taxes scarcely reach 21% of Gross Domestic Product (GDP), whilst in countries like Sweden and Belgium they exceed 50%.

Europe is in a league of its own

Let us take a look at the bigger picture. It could be said that Europe is playing in another league: the league of the “super-states” or “continental-states”. The EU budget is better equated with that of the USA, China, Russia or India, given that the European project is global in influence and the significance of Community policies does not cease to grow. China’s macroeconomic invincibility is well-known, but its “economic miracle” is largely the result of the government’s strategic management of the country’s astronomical taxes. The American model is exemplary. The US Congress recently approved a 2006 budget of almost 3 trillion euros, 2005’s estimated GDP currently standing at 15 trillion euros. Hence, the US budget forms 20% of the country’s GDP. If we hope to compete with these models, we clearly cannot maintain our paltry 1% which - up until now - has produced good results.

Everyone must be taken into account

Tackling the new challenges facing the EU without taking into account the current situation of all the member states would be irresponsible. It is unacceptable to expect the ten new member states plus Portugal and Greece to allow the rest of the Community to (quite literally) invade their markets, as well as requiring that they adapt to a harsh taxation system, guard their borders and prepare themselves to join a single market with a single currency, if in return we are not going to provide them with fair competition in an equal environment. These countries constitute 50% of the member states and they are in need of large, capable infrastructures that will facilitate the rapid circulation of goods and capital, the dissemination of knowledge and an increase in economic activity. The installation of such infrastructure is a basic requirement of successful capitalism and is a rule best not forgotten. Today we seem to assume that “all of us are Berliners”, forgetting that, in fact, many of us are Poles, Hungarians and Maltese.

If we have done it before, we can do it again

The principles of regional solidarity and redistribution of income have always yielded good results. The best example of this can be found in the EU’s own history. In 1985, immediately following the decision made by the then President of the European Commission Jacques Delors and his European contemporaries to launch the Single Market and the Schengen Agreement on free movement, a pact was made so that these reforms could not be carried out without the support of a third of all EEC member states. As Spain, Ireland, Portugal and Greece were not ready to compete in the Single Market or to take on the responsibilities of Schengen, steps were taken to accelerate their development. Namely, Community taxation was increased to reach current levels, Common Agricultural Policy (CAP) spending was halved and fruitful Cohesion Funds were introduced. The success of this formula cannot be denied in Spain, Ireland or even Greece.

Current challenges are just as difficult as these previous ones. Today’s challenges are: bringing Europe closer to its citizens; increasing democracy in the EU institutions; managing mass immigration; a common defence policy; and a leap forwards in the modernisation of industries. However, our indifferent European leaders, especially those of Germany, France, the UK and the Netherlands, are not living up to the challenge. They do not trust that European Union will overcome these challenges, but prefer instead to opt for strategies benefiting only their own interests.