No Borrowing Without Taxing? Fiscal Solidarity of Next Generation EU in Light of the American Experience

This article argues that the EU response to the pandemic, the Next Generation EU (NGEU), dubbed a "Hamiltonian moment" for Europe, can be better understood if compared to the US under the Articles of Confederation. The key aspect of the original Hamiltonian moment was the assumption of states’ debts after the Union was given tax power. None of this happened with the NGEU. The EU was not given any significant new sources of revenue, apart from some environmental levies, and was only allowed to borrow more on the financial markets to finance new fiscal solidarity mechanisms. In the US, this kind of borrowing power gave rise to monetary financing of the debt and enormous inflation. Instead of backing the enlarged borrowing powers with a fiscalization process leading to tax powers, the EU created a hybrid system of temporary, limited quasi-fiscalization in the form of the NGEU, which has legitimacy gaps. Simultaneously, the EU introduced enhanced fiscal regulation with conditionalities in the form of the new European Semester (an annual EU cycle of economic and fiscal coordination) tied to the allocation of the NGEU funds. Additionally, the EU has only promised to work in the future on various forms of revenue needed to pay the new debt. Hence, I will show that the NGEU could be better described as a "Morrisian moment" for Europe, as Robert Morris, the superintendent of finance of the US (1781–1784), was the very first finance minister of a similar kind of a union, with the power to borrow but no power to tax, governed by the unanimity rule in fiscal matters, which led to the failure of his proposals for national revenue

Towards fiscalization of the European Union? : the US and EU fiscal unions in a comparative historical perspective

This is a revised version of the paper, which won the first College of Europe - Arenberg European Prize 'Exploring Federal Solutions'. This paper was presented at the Institute of European Studies at the University of California, Berkeley on April 23, 2015.This paper shows that the emergence of the federal power to tax is the result of a sovereign debt crisis at the state level. I analyse the fiscal history of the early United States (US) to demonstrate how the institutional flaws of the Articles of Confederation, mainly the central budget based on contributions from the states, so-called 'requisitions', led to a sovereign debt crisis on the state level, which triggered taxpayers' revolts in 1786/1787. This social unrest, in turn, was perceived by the political élite as an endogenous threat to the union and paved the way for the fiscalization of the federal government, i.e. the creation of a genuine fiscal union with the federal power to tax based firmly in the Constitution of 1789. This analysis is complemented with lessons for the European Union (EU) on how to handle such a debt crisis if the union is to be preserved

Accountability in EU Economic Governance: European Commissioners in Polish Parliament

This article analyses the interactions between the members of the Polish parliament with the European commissioners in the context of the European Semester, the annual cycle of economic coordination. The Commission drafts crucial documents in this process which assess the implementation of the Country Specific Recommendations (CSRs): the Annual (Sustainable) Growth Survey and the Country Reports. The goal of this article is to assess how the Commission is held to account by a national parliament and how this affects the level of implementation of CSRs. The findings suggest that the Commission is accountable to this national parliament, even if the form of accountability taken is rather innovative and its policy impact limited, at both the EU (the CSRs tend to be immune to Members of [national] Parliament’s contestation) and the national level, as the implementation of CSRs seems to be independent of the level of their scrutiny

Rising to a Challenge? Ten Years of Parliamentary Accountability of the European Semester

As a result of the euro crisis, EU economic governance has been reformed and EU institutions have gained new competences regarding national budgets, with the European Semester (the annual cycle of economic surveillance of the member states) being the most prominent example. With the Commission and the Council being the main actors, and the European Parliament playing only a minor role, a debate about the democratic legitimacy of the Semester and the role of national parliaments (NPs) in this regard has unfolded. This thematic issue, therefore, addresses the question of how parliamentary accountability of the European Semester has evolved: Have NPs met the challenge by adapting to the new situation in a way that allows them to hold the executive accountable? While the contributions to this thematic issue show significant variation across NPs, overall they reveal a rather pessimistic picture: Despite several institutional innovations concerning the reforms of internal rules and procedures, the rise of independent fiscal institutions, inter-parliamentary cooperation, and hearings with the European Commissioners, NPs have remained rather weak actors in EU economic governance also ten years after the Semester's introduction. Whether recent changes linked to the establishment of the Recovery and Resilience Facility introduced in response to the Covid-19 crisis will change the picture significantly remains to be examined

Why fiscal justice should be reinstalled through European taxes that the citizens will support : a proposal

We must eliminate a blind spot in citizens’ minds, who tend to think “the more money for the EU, the less for our countries”. By demonstrating the importance of the own source of EU revenue, rather than focusing solely on the size of its budget, we can understand that financing the EU is not such a ‘zero-sum’ game. Therefore, we use the term ‘fiscalization’1 which implies the power to tax, rather than ambiguous terms such as ‘Eurozone budget’. History of other multilevel systems of government, such as the United States, teaches us that some types of taxes can only be effectively - and justly - levied by the highest level of government, the revenue from which could then be used for the common goods. Importantly, our data, based on a YouGov survey conducted in 11 member states, shows that the citizens support the introduction of European taxes, such as a tax on large internet companies. Such EU taxation could reinstall the tax justice, provide more revenues for delivering EU-wide common goods and to make the Economic and Monetary Union more resilient.European Research Council under the European Union’s Horizon 2020 research and innovation programme (grant agreement no. 716923)

Why the sovereign debt crisis could lead to a federal fiscal union : the paradoxical origins of fiscalization in the United States and insights for the European Union

Published online: 09 Feb 2017This paper shows that the emergence of the federal power to tax is the result of a sovereign debt crisis at the state level. I analyse the fiscal history of the early United States (US) to demonstrate how the institutional flaws of the Articles of Confederation, mainly the central budget based on contributions from the states, so-called ‘requisitions’, led to a sovereign debt crisis on the state level, which triggered taxpayers’ revolts in 1786/1787. This social unrest, in turn, was perceived by the political élite as an endogenous threat to the union and paved the way for the fiscalization of the federal government, i.e., the creation of a fiscal union with the federal power to tax based firmly in the Constitution of 1789. This analysis concludes with four insights for the European Union (EU).This work was supported by the US State Department and the Directorate-General for Education and Culture of the European Commission, under Fulbright-Schuman Grant [25.04.2014], administered by the Commission for Educational Exchange between the United States and Belgium; the European University Institute under the Exchange Programme with University of California, Berkeley [04.02.2014]; Ministry of Foreign Affairs of the Republic of Poland, under PhD Scholarship [09.07.2012]; College of Europe and Arenberg Foundation under ‘College of Europe-Arenberg European Prize: Exploring Federal Solutions’ (24.02.2015); and Fondation Jean Monnet pour l’ Europe under the Henri Rieben Scholarship (19.06.2015)