CESI demands revised EU economic governance
2023-03-20 12:44
Responding to ongoing discussions in the EU institutions to reform the EU’s economic governance system, the Presidium of CESI has issued a resolution calling for a new balance between public expenduture and investment, budgetary debts, and public revenues.
According to the resolution:
- In view of the austerity-based policy responses to the financial crisis post-2007 (which led to heavy adverse social and economic disruptions) and the investment-based response to the Covid pandemic (which kept unemployment at bay and has led back relatively quickly to a path of economic growth throughout Europe) it seems plausible that the latter approach is in principle preferable to the former. This should be noted for further crises.
- Investments in well-resourced and resilient public services seem costly in the short term, but they pay off in the medium- and long-term because the next crisis comes for sure – it is just not clear when exactly, where, and which form and scope. Building public services which are performing and resilient to crises is important.
- At the same time, sustainable public debt targets over time should remain at the core of the EU’s economic governance framework. To finance increased needs for public spending, tapping new financial revenue opportunities should take precedence over new debts. Taxation policy can serve as an example. Carbon taxes, financial transaction taxes, digital taxes and increased capital taxation (especially compared to labour taxation) offer ample new public revenue sources which moreover foster socio-economic fairness for societies.
CESI Secretary General Klaus Heeger said: “How to bring together budget consolidation with much needed large-scale investments? The limits of this approach in the EU’s economic governance system became obvious to all during the last crises. CESI welcomes ongoing discussions in the Council and the Commission to re-balance public expenditure and investment with budgetary debts in the economic governance framework. However, a reform should necessarily bring in a third dimension: Collecting taxes that currently slip through illegal tax dodging loopholes or legal but unethical tax avoidance schemes. Workers pay large shares of their revenues as straight as income taxes but large amounts of investments are needed in public services and the greening and digitalisation of social and eocnomic life. There it is only fair that large multinational companies that currently pay absurdly low taxes are asked to contribute more. With higher public revenues through a fairer tax collection, investments are possible without making new debts.”
