Costa, Leonardo

English

Repositório Institucional da Universidade Católica Portuguesa

4/29/2021 Beyond the EU budget zero-sum game – Leonardo Costahttps://www.socialeurope.eu/beyond-the-eu-budget-zero-sum-game 1/4by Leonardo Costa on 19th June 2019Leonardo CostaDiscussion of the EU budget brings strife between supposed net contributors and bene ciaries.Yet the picture is more complex and Europe-wide taxation o ers a way out.When it comes to the budget for the European Union, debate isdominated by which member states are net contributors andwhich net bene ciaries. This has been a barrier tofurthering the European project. Net contributors wantto pay less and the current programming framework, Europe2020 (2014-20), was the  rst to reduce an already small EUbudget.With the sovereign-debt crisis in the euro area, Portugal,Ireland, Italy, Greece and Spain (the ‘PIIGS’) were accused ofwasting European money and living beyond their means, at theexpense of Germany and other net budget contributors. Yet wecan think of member states’  nancial balances not just in termsof their budgets but also their current accounts. In this context, net contributors are those memberstates which receive more in imports from the single market than they export to it; vice versa for netbene ciaries.The  gure shows average net contributions to the EU budget and the single market (net exports to therest of the EU), as well as the sum of the two, for Germany and the PIIGS, in 2008-16. These arecomputed in proportion to gross national income (GNI).Net contributions in the EU (Germany & PIIGS, 2008-2016)Social Europepolitics, economy and employment & labourBeyond the EU budget zero-sum game4/29/2021 Beyond the EU budget zero-sum game – Leonardo Costahttps://www.socialeurope.eu/beyond-the-eu-budget-zero-sum-game 2/4Enter your email address here... SIGN UPCutting-edge thinking straight to your inbox"Social Europe publishes thought-provoking articles on the big political and economic issuesof our time analysed from a European viewpoint. Indispensable reading!"Polly ToynbeeColumnist for The GuardianSource: European Commission (Eurostat / Pordata / Danish ParliamentEU Information Centre)Now the situation of Germany and the several PIIGS becomes diverse rather than polarised. Regardingthe EU budget, two member states are net contributors: Germany and Italy. But these net contributionsare below 0.5 per cent of GNI (respectively, -0.38 and -0.26 per cent). Greece and Portugal appear as themain net bene ciaries of the budget (respectively, 2.33 and 1.65 per cent).Concerning the EU single market, Portugal and Greece, the two member states which bene t most fromthe budget, are net importers and thus the main net contributors (respectively, -2.55 and -2.23 per cent).Italy, to a lesser extent, is also a net contributor to the single market (-0.02 per cent). Ireland, Spain andGermany are net bene ciaries (respectively, 16.79, 4.20 and 3.43 per cent).4/29/2021 Beyond the EU budget zero-sum game – Leonardo Costahttps://www.socialeurope.eu/beyond-the-eu-budget-zero-sum-game 3/4Powered by ConvertKitSumming up, Portugal and, to a lesser extent, Italy are net contributors to the EU (respectively, -0.90 and-0.29 per cent). In the case of Portugal, net contributions via the single market outweigh the net bene tsvia the budget, while Italy is a net contributor in both senses. Ireland, Spain, Germany and, to a lesserextent, Greece are net bene ciaries in the round (respectively 17.01, 4.47, 3.05 and 0.10 per cent). In thecase of Germany, the largest economy in the eurozone, the net bene t derived from the single market isalmost nine times higher than the net contribution to the EU budget.These data revise the question as to who pays most into the EU and who gets most back. In a fewmember states, being a net contributor may imply an increasing external debt.Own resourcesThe EU budget is funded with own resources and resources from the member states. The formerinclude, for instance, customs duties levied. The latter however provide the bulk of the budget and feedthe discussion. To shift EU funding from member states’ resources to EU own resources would reframethe discussion—particularly if the EU levied taxes which member states could not collect andso alleviated or even eliminated member states’ contributions.At the member-state level, taxes on labour and consumption have risen as those on capital have beenreduced. With the international liberalisation of capital movements, member states refrain from levyingtaxes on  nancial transactions and large multinational corporations, for fear of capital  ight or at leastdelocalisation of these companies. On the contrary, they have been lowering taxes on capital, to attractportfolio and foreign direct investment, leading to beggar-my-neighbour  scal dumping.Please help us improve public policy debatesAs you may know, Social Europe is an independent publisher. We aren't backed by a largepublishing house or big advertising partners. For the longevity of Social Europe we depend on ourloyal readers - we depend on you. You can support us by becoming a Social Europe member forless than 5 Euro per month.  Thank you very much for your support!Become a Social Europe Member4/29/2021 Beyond the EU budget zero-sum game – Leonardo Costahttps://www.socialeurope.eu/beyond-the-eu-budget-zero-sum-game 4/4If taxes on international  nancial transactions and multinational corporations were Europe-wide,investors and companies would no longer choose the EU member state o ering the greatest taxadvantages—they would pay the same tax regardless. The decision would instead be to have, or not toenjoy, access to the single market from within. Given that the EU is the second largest economy in theworld, the costs associated with such a decision would be large enough to make it preferable for theseinvestors to pay a little more tax to operate within the EU. 

Beyond the EU budget zero-sum game

https://repositorio.ucp.pt/bitstream/10400.14/43525/1/Beyond_the_EU_budget_zero_sum_game_Leonardo_Costa.pdf

Beyond the EU budget zero-sum game

Abstract

Similar works

Full text

Available Versions

Repositório Institucional da Universidade Católica Portuguesa