The Guardian, Dec 10, 2018.
The budget would be worth 4% of the EU’s GDP – four times the current budget. Funds would be raised from four sources: an extra 15% levy on corporate profits, tax increases on individuals earning more than €100,000, a wealth tax on personal fortunes above €1m, and a tax on carbon emissions.
The money would be overseen by a new European assembly consisting mostly of national politicians and some MEPs. While the assembly would be in touch with EU institutions, it would sit outside EU treaties and have the final word on spending.
The public are invited to comment and improve the proposals, which the authors said were “not perfect, but … do have the merit of existing”
A group of progressive Europeans led by the economist and author Thomas Piketty has drawn up a bold new blueprint for a fairer Europe to address the division, disenchantment, inequality and rightwing populism sweeping the continent.
The plan, crafted by more than 50 economists, historians and former politicians from half a dozen countries, includes huge levies on multinationals, millionaires and carbon emissions to generate funds to tackle the most urgent issues of the day, including poverty, migration, climate change and the EU’s so-called democratic deficit.
Published as the British parliament is set for a climactic Brexit vote, the “manifesto for the democratisation of Europe” says EU institutions are stuck in “a technocratic impasse” that benefits the rich.
“Following Brexit and the election of anti-European governments at the head of several member countries, it is no longer possible to continue as before,” says the document.
“We cannot simply wait for the next departures or further dismantling without making fundamental changes to present-day Europe.”
The move underlines the gulf between the preoccupations of the UK and those across the Channel. While the UK is consumed by its tortuous EU exit process, Europe’s pro-EU political forces are concerned with avoiding losses to anti-European populists in next May’s European elections.
The left-leaning authors criticise movements dedicated to “hunting down foreigners and refugees”, but also parties espousing what they call “hardcore liberalism and the spread of competition to all”.
Signatories include Italy’s former prime minister Massimo D’Alema and the Belgian political scientist and socialist mayor of Charleroi, Paul Magnette. Michael Jacobs, who advised the UK’s former prime minister Gordon Brown, is also a signatory.
At the heart of the manifesto is a call for a European assembly that would have a budget of up to €800bn a year, financed by taxing corporate profits more effectively, as well as income and wealth.
The EU has been accused of failing to address the manifest unfairness of huge multinationals such as Apple, Google and Amazon channeling profits through member states where taxes are lowest.
The budget would be worth 4% of the EU’s GDP – four times the current budget. Funds would be raised from four sources: an extra 15% levy on corporate profits, tax increases on individuals earning more than €100,000, a wealth tax on personal fortunes above €1m, and a tax on carbon emissions.
Half of the proceeds would be returned to member state governments. A quarter would go to research, innovation and education. A fund to better manage migration and a fund to make agriculture and industry greener would also benefit.
Insisting they do not want a “transfer payments Europe”, countries would see only a 0.1% difference in what they collect and get in return – a big difference from proposals for a eurozone budget that many economists see as a long-term necessity for the 19-country bloc.
The money would be overseen by a new European assembly consisting mostly of national politicians and some MEPs. While the assembly would be in touch with EU institutions, it would sit outside EU treaties and have the final word on spending.
The public are invited to comment and improve the proposals, which the authors said were “not perfect, but … do have the merit of existing”.
Guntram Wolff, director of the Bruegel thinktank, who did not sign the letter, questioned the need for a continent-wide project. “If the cross-border transfer element is only 0.1%, why do the whole thing at EU level?” he asked.
“Anything we would do at the euro-area level would mean doing something less at the national level and that is politically why it doesn’t happen,” he said, pointing to failed attempts to create pan-European national insurance schemes.
Richard Corbett, Labour’s leader in the European parliament, said the manifesto appeared to reinvent the wheel. “Instead of using the already existing EU budget and the already existing directly-elected Parliament, and building upon them, it suggests that the member states of the EU would all agree to set up a brand new hybrid Parliament and give it a budget in which it alone would decide on spending four times the size of the existing budget.
They’d do better to lend their support to proposals that can actually be achieved.”
There have been a series of failed and faltering attempts at voluntary collaboration on economic policy. After the French president, Emmanuel Macron, came to power on a mandate of “a Europe that protects”, Paris and Berlin renewed their vows on Franco-German cooperation, opening talks on corporate tax harmonisation as well as a common position on an EU digital tax.
With Angela Merkel hamstrung by coalition difficulties and in the twilight of her time as German chancellor, the agenda has stuttered, causing frustration in Paris.
The limits of voluntary cooperation were also exposed in Europe’s search for a financial transaction tax. In 2014 a coalition of 10 willing EU member states embarked on plans for the so-called Robin Hood tax on shares and derivatives, but five years later that agreement remains elusive and some countries have dropped out.
Meanwhile, European diplomats bemoan the lack of leadership from capitals that hampers the EU reform agenda, from strengthening the eurozone to overhauling asylum policy.
Wolff said the eurozone debate had been “basically stuck” for at least five years. “It remains very, very small steps if at all. We will see only a change when the next big crisis happens; then decisions will be taken. But in the absence of a serious crisis, there is no leadership across Europe to agree.”
The manifesto is published by the Guardian, Le Monde, Der Spiegel, La Vanguardia, Gazeta Wyborcza, La Repubblica and Politiken
This article was amended on 10 December 2018. Pablo Iglesias was an initial signatory to the manifesto but later withdrew.
Our manifesto to save Europe from itself
Since the election of anti-European governments across the EU, and with Brexit looming, it is no longer possible to continue as before. We cannot simply wait for the next departures, or further dismantling without making fundamental changes to present-day Europe.
Our continent is caught between political movements whose programme is confined to hunting down foreigners and refugees, on one hand, and on the other those who claim to be European but in reality continue to consider that hardcore liberalism and the spread of competition are enough to define a political project. They don’t recognise that this lack of social ambition is what leads to feelings of abandonment.
There are some movements attempting to end this fatal dialogue and address the structural problems that have arisen after a decade of economic crisis. There is no lack of these specifically European-critical situations: structural underinvestment in the public sector, particularly in training and research, a rise in social inequality, acceleration of global warming and a crisis in the reception of migrants and refugees. But these movements often have difficulty in formulating a coherent alternative project, and in describing precisely how they would like to organise the Europe of the future.
This is why we, European citizens from different backgrounds and countries, are today launching this appeal for the in-depth transformation of the European institutions and policies. Our manifesto contains concrete proposals, in particular a project for a democratisation treaty and a budget project – and we have made it all publicly available. Our ideas may not be perfect, but they do have the merit of existing. The public can access them and improve them. They are based on a simple conviction: Europe must build a new model to ensure the fair and lasting social development of its citizens. The only way to persuade them is to abandon vague and theoretical promises. If Europe wants to restore solidarity with its citizens it can only do so by providing concrete evidence that it is capable of establishing cooperation and by making those who have gained from globalisation contribute to the financing of public-sector good. That will mean making large firms contribute more than small and medium businesses, and the richest taxpayers paying more than poorer taxpayers. This is not the case today.
Our proposals are based on the creation of a budget for democratisation that would be debated and voted on by a new, sovereign European assembly. This will at last enable Europe to equip itself with a public institution capable of dealing with crises in Europe immediately and of producing a set of fundamental public goods and services in the framework of a lasting and solidarity-based economy. The promise made at the treaty of Rome of “harmonisation of living and working conditions” will finally become meaningful.
This budget, if the European assembly so desires, will be financed by four major European taxes, the tangible markers of this European solidarity. These will apply to the profits of major firms, the top incomes (over €200,000 a year), the highest wealth owners (over €1m ) and carbon emissions (with a minimum price of €30 a tonne). If it is fixed at 4% of GDP, as we propose, this budget could finance research, training and the European universities, an ambitious investment programme to transform our model of economic growth, the financing of the reception and integration of migrants, and the support of those involved in carrying out this transformation. It could also give some budgetary leeway to member states to reduce the regressive taxation that weighs on salaries or consumption.
The issue here is not one of creating a transfer of payments across Europe – taking money from the “virtuous” countries to give it to those that are less so. The project limits the gap between expenditure deducted and income paid by a country to a threshold of 0.1% of its GDP – this could only be increased should there be consensus to do so. This threshold can be raised in case there is a consensus to do so, but the issue is primarily of reducing the inequality within countries, not between them, and of investing in the future of all Europeans. But those calculations would exclude spending that benefits all countries equally, such as action on climate change. Because it will finance European public goods benefiting all countries, the budget for democratisation will de facto also foster convergence between countries.
Because we must act quickly but we must also get Europe out of the present technocratic impasse, we propose the creation of a European assembly. This will enable these new European taxes to be debated and voted as also the budget for democratisation. This European assembly can be created without changing existing European treaties.
The assembly would, of course, have to communicate with the present decision-making institutions (in particular the Eurogroup in which the ministers for finance in the eurozone meet informally every month). But, in cases of disagreement, the assembly would have the final word. If not, its capacity to be a locus for a new transnational political space where parties, social movements and NGOs would finally be able to express themselves would be compromised. Equally its actual effectiveness, since the issue is one of finally extricating Europe from the eternal inertia of intergovernmental negotiations, would be at stake. We should bear in mind that the rule of fiscal unanimity in force in the European Union has for years blocked the adoption of any European tax and sustains the eternal evasion into fiscal dumping by the rich and most mobile, a practice which continues to this day despite all the speeches. This will go on if other decision-making rules are not set up.
Given that a newly created European assembly would have the ability to adopt taxes and to affect the very core of the democratic, fiscal and social compacts of states, national and European parliamentarians must be central. This is why we propose, in the democratisation treaty available online, that 80% of the members of the European assembly should be from national parliaments, with 20% from the present European parliament. This choice merits further discussion. In particular, our project could also function with a lower proportion of national parliamentarians (for instance, 50%). But in our opinion an excessive reduction of this proportion might detract from the legitimacy of the European assembly in involving all European citizens in the direction of a new social and fiscal pact, and conflicts of democratic legitimacy between national and European elections could rapidly undermine the project.
Thus national elections will de facto be transformed into European elections. National elected members will no longer be able to simply shift responsibility on to Brussels and will have no other option than to explain to voters the projects and budgets they intend to defend in the European assembly. By bringing together the national and European parliamentarians in one single assembly, habits of co-governance will be created which at the moment only exist between heads of state and ministers of finance.
We now have to act quickly. While it would be preferable for all EU countries to join the project without delay – especially the four largest countries in the eurozone (which represent more than 70% of the GNP and population) – it is designed so that it can be adopted and implemented by any set of countries that wish to do so. It enables those who wish to make immediate progress by adopting this project to do so right now. We must all assume our responsibilities to participate in a detailed and constructive discussion on the future of Europe, lest our continent is left to sink further into damaging division.
Thomas Piketty is professor of economics at the Paris School of Economics
Other signatories: Sébastien Adalid, Michel Aglietta, Nacho Alvarez, Julie Bailleux, Marija Bartl, Pedro Bacelar de Vasconcelos, Marie-Layre Basilien-Gainche, Myriam Benlolo Carabot, Loïc Blondiaux, Karolina Borońska, Andreas Botsch, Patrick Boucheron, Emmanuel Bouju, Begnina Boza-Kiss, Hauke Brunkhorst, Bojan Bugarič, Klaus Busch, Julia Cagé, Lucas Chancel, Christophe Charle, Christian Chavagneux, Amandine Crespy, Fabio De Masi, Anne-Laure Delatte, Donatella Della Porta, Yves Deloye, Paul Dermine, Brigitte Dormont, Guillaume Duval, Susanne Elsen, Emanuele Ferragina, Bastien François, Philippe Frémeaux, Diane Fromage, Miguel Gotor, Julien Grenet, Ulrike Guérot, Gabor Halmai, Pierre-Cyrille Hautcoeur, Stéphanie Hennette, Rudolf Hickel, Mario Hübler, Élise Huillery, Simon Ilse, Liora Israel, Michael Jacobs, Yannick Jadot, Luis Jimena Quesada, Christian Joerges, Kädtler Jürgen, Iphigénie Kamtsidou, Jakob Kapeller, Pascale Laborier, Justine Lacroix, Sylvie Lambert, Camille Landais, Sandra Laugier, Rémi Lefebvre, Steffen Lehndorff, Nicolas Leron, Ulrike Liebert, Pascal Lokiec, Philippe Maddalon, Mikael Madsen, Paul Magnette, Maria Malatesta, Francesco Martucci, Frédérique Matonti, Dominique Meda, Robert Menasse, Sophie Meunier, Zoltan Miklosi, Eric Millard, Robert Misik, Éric Monnet, Alberto Montero, Daniel Mouchard, Ulrich Mückenberger, Jan-Wener Muller, Olivier Nay, Sighard Neckel, Fernanda Nicola, Silke Ötsch, Walter Ötsch, Bruno Palier, Mazarine Pingeot, Martin Pigeon, Sébastien Platon, Thomas Porcher, Christophe Prochasson, Thomas Ribemont, Julie Ringelheim, Daniel Roche, Pierre Rosanvallon, Ruth Rubio Marin, Guillaume Sacriste, Emmanuel Saez, Gisele Sapiro, Francesco Saraceno, Thomas Sauer, Patrick Savidan, Frédéric Sawicki, Axel Schäffer, Alan Scott, Thomas Sterner,Julien Talpin, Stéphane Troussel, Laurence Tubiana, Boris Vallaud, Fernando Vasquez, Antoine Vauchez, Brigitte Young, and Gabriel Zucman
