The President of the European Commission, Ursula von der Leyen, confirmed, on Wednesday 15 September, during her State of the Union speech, that the review on the reform of the European Union budget rules would be relaunched “in the coming weeks “ in order to “build a consensus on the way forward well ahead of 2023”.
The Commission is therefore of the opinion that a reform of the Stability and Growth Pact, which is frozen until the end of 2022, is possible before the deactivation of the general escape clause. Eight Member States, who advocate for a return to fiscal consolidation, do not agree (see EUROPE 12788/1).
Mrs von der Leyen assured that the EU would not repeat the mistakes of the 2012 sovereign debt crisis, after which it took “eight years” to return to pre-crisis growth levels because of fiscal consolidation imposed too early. “We will not repeat this mistake”, she promised, welcoming the fact that nineteen Member States already have their economy at 2019 pre-pandemic levels, in particular because the EU opened the budgetary floodgates to tackle the Covid-19 pandemic.
On behalf of the ECR group, the Italian MEP, Raffaele Fitto, said that he would have liked to have more details on the Commission’s intentions regarding the reform of the Pact. “If we go back to the old rules of two years ago, as if nothing had happened, it would be a disaster”, he said. For Tiziana Beghin (Non-attached Member, Italy), the Stability Pact should be transformed into a “Solidarity and Development Pact” to stimulate sustainable and technological development.
Next Generation EU. Mrs von der Leyen recalled that the Next Generation EU Recovery Plan, which will allow Member States to “invest in both short-term recovery and long-term prosperity”, will have to be financed by new own resources. Specific proposals from the Commission are expected by the end of 2021 (see EUROPE 12780/13).
At the end of the debate, she referred to the difficulties encountered in the negotiations on the Hungarian and Polish recovery plans, which are stumbling over issues related to the fight against corruption and respect for the Rule of law.
To be approved, a national recovery plan must include reforms that implement a substantial part of the country-specific recommendations addressed by the European level to a Member State. If the independence of the judiciary and the fight against corruption are mentioned, then we want reforms in this area in the national recovery plans.
“Until this is the case, we cannot close the file. (...) We are in this very phase“, said Mrs von der Leyen.
Taxation. The President of the European Commission highlighted the defence of tax fairness, with companies making profits in the EU paying their fair share of taxes.
To fight tax evasion, the Commission will propose a legislative initiative that will target “profits hidden behind shell companies”, she added. Such an announcement was already foreseen in the EU institution’s Action Plan (see EUROPE 12755/27, 12720/15).
Mrs von der Leyen also promised that every effort would be made to seal the global deal on the minimum corporate tax rate. In its letter of intent to the European Parliament and the Council of the EU, the Commission announces two legislative proposals that will implement, in the EU, the forthcoming OECD agreements on international corporate tax reform: one on the reallocation of taxing rights and one on a minimum effective tax rate.
See the State of the Union address: https://bit.ly/3ltHxvq
See the Commission’s letter of intent for 2022: https://bit.ly/3EmHlGS (Original version in French by Mathieu Bion)