Europe on historic doorstep: billions of EU taxes to finance corona aid will soon be added

The European Union is about to transform itself. It wants to borrow 750 billion euros jointly, a revolutionary integration of European state finances. That should fund the EU’s massive corona rescue plan, and provide both loans and grants to affected Member States. Repaying that $ 750 billion will require a whole host of EU taxes, including a giant step.

In the news: “This is Europe’s moment,” said Ursula von der Leyen, President of the European Commission.

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The details: The plan that the European Commission has come up with will definitely transform the European Union.

  • Von der Leyen delivered a powerful speech in the European Parliament yesterday. One that will reverberate for a long time, because the plans that the European Commission is coming up with, transform the EU into a fully-fledged financial union, with a substantial package of own taxes.
  • Everything revolves around a gigantic rescue package of 750 billion euros, 500 billion in subsidies and 250 billion in loans. The EU (which is an excellent borrower with an AAA rating) will collect it itself on the financial markets. With that sum, Member States that have crashed through the corona crisis must be helped. “Doing nothing would definitively break up the EU economicallyVon der Leyen said dramatically.
  • Angela Merkel, the German chancellor, and Emmanuel Macron, the French president, gave the cross last week, with a historical agreement, in which they prepared the political path. They talked about 500 billion, the European Commission is now doing a lot more, because that amount is needed, they say.
  • “Either we all tackle the crisis alone, leaving behind countries, regions and people. And then we accept that we are a Union of haves and havenots. Or we choose this road together, we take a leap forward and we are paving this strong path for our people and the next generations, ”said von der Leyen with the necessary pathos in the European Parliament.

Why is this “historical”? The so-called “eurobonds” are such a fact, and are immediately used en masse:

  • The European Union has never borrowed jointly, which means that the pressure on less reliable borrowers, countries such as Greece, Italy, Spain and Portugal, has disappeared completely: they suddenly have that common AAA status like all of the EU. They benefit from the financial credibility of the rest of the EUeven if they have not had their budget in order for years, as Germany, for example, does. It is therefore a step towards solidarity and wealth sharing without precedent.
  • Belgium also benefits from this: our country has AA status, with “negative outlook”, no top rating, but quite okay. However, government debt, already close to 110 percent, is in danger of exploding further, with budget deficits above 10 percent of GDP this year. In the long run, this will certainly undermine the borrowing capacities of Belgium.
  • That the European Union does this seems necessary for survival: the boss of the European Central Bank Christine Lagarde presents new estimates, which predict a contraction of 8 percent to as much as 12 percent of the economy in the eurozone. That would be a blow more than double the previous major banking crisis in 2008.

But there’s more: Just as well, the idea of ​​letting the European Union finance itself is a huge boost to that “federal” level.

  • Almost as historic as the plan to borrow jointly is the way the EU plans to repay that money: by letting the EU levy a lot of taxes itself. Until now, many Member States have stopped this: the EU is funded with “endowments” or “indirect taxes” from each Member State.
  • In order to finance Europe’s new multi-year budget and the ‘Green Deal’, talks were already underway to have the EU levy more taxes. But that discussion is now accelerating enormously.
  • A lot of Member States are not enthusiastic: they much prefer to keep financial power with themby keeping money and collecting taxes. A fully-fledged Union has its own taxes and revenues, which is exactly where the Commission wants to go.
  • That is not illogical: that 750 billion must be repaid someday. If the EU does not Can demonstrate “repayment capacity”, that AAA status is difficult to maintain in the long term.
  • According to the Financial Times, the European Commission has prepared a whole series of proposals on taxes to repay that package of 750 billion. They are typically the kind of taxes that you best arrange “European”, instead of at Member State level:
    • A reform of it CO2 emission system with a new tax should yield 10 billion every year.
    • In addition, there would be a tax on it CO2-intensive industrial products from outside the EU, which would yield between 5 and 14 billion.
    • There are proposals for one tax on plastic waste for 7 billion euros a year.
    • A new tax on large companies would go towards 10 billion a year.
    • There is a plan to charge large tech companies like Google and Facebook, which would generate 1.3 billion a year.

Now the political battle follows: The Member States are going to have a hard time. About the plan itself, but also about the distribution.

  • The plan is called “Next Generation EU” and was presented with a lot of fuss by von der Leyen. The European Commission is putting strong pressure on the 27 member states. But they still have to approve it, and that promises to be a daunting task for the European Council and its President Charles Michel. Because the EU wants to roll out the plan from January 2021.
  • Michel and von der Leyen already receive the support of Merkel and Macron, but it will be very difficult. The four northern, economical countries, the “frugal four“, The Netherlands, Austria, Denmark and Sweden, don’t really like the idea of ​​subsidies: they only want loans that have to be repaid.
  • In addition, there is the distribution of the gigantic sum. In a preliminary first list Italy and Spain are the big gulps of support: Rome would get 172.7 billion, with slightly more loans than grants, and Madrid can count on 140 billion, with slightly more grants than loans. The Eastern European countries, which are not directly affected by the crisis at all, but will suffer economically, can also count on large sums.
  • Anyone who thought that Belgium could count on a huge package because it suffered heavily from the crisis is mistaken: there is talk of “only” 5.48 billion for Belgium. But the general recovery of the European economy, on which Belgium as an import and export country depends greatly, is worth much more than the exact sum that flows here. If Europe goes into recession for many years, Belgium can make a big red cross over its budget, and public finances will be in serious trouble.
  • In addition, can other criteria, such as excess mortality, may still be added to the distribution, which is not definitive, can be heard in government circles. Immediately, the European Commission will therefore have to try to objectively determine “who suffered the worst from the crisis”. Then Belgium could possibly get even more.
  • It is clear that the minority government Wilmès II is fully behind the plan that would strengthen the EU in a revolutionary way. Certainly the Southern European, but also the Eastern European countries are (due to, among other things the generous distribution of money to eastern Europe) behind the plan. That puts pressure on the “frugal four“: People are eagerly awaiting reactions in The Hague and Vienna.
  • EU leaders will meet in mid-June for a big summit, which may already be a “physical” meeting, not a conference call. That seems necessary to convince everyone, although Angela Merkel already announced that she doesn’t expect a deal yet. First, the pressure on Mark Rutte, the Dutch Prime Minister, and Sebastian Kurz, the Austrian Chancellor, must further increase.

The big picture: The crisis is now a time for the EU to do previously unthinkable business.

  • Historically, the Belgian political class has always been very pro-European, or even “federalist”: the EU had to become a fully-fledged political level above the member states; the more power, the better. That the EU will soon borrow jointly, and also levy a whole list of its own taxes, is the wet dream of those who always saw a “federal Europe” as the ultimate goal.
  • On the Flemish side, that “historical love” has turned: the two largest parties see it differently. Vlaams Belang is flatly opposed to the European project, and absolutely does not want to hear of a reinforcement. N-VA is more nuanced, “the attitude is not Euro-skeptic, but Euro-critical”. Common debts, all well and good, but who will soon pay the bill is the question for them.
  • But the minority cabinet goes, even without a parliamentary majority, fully involved in the Franco-German plans: both Minister of Finance Alexander De Croo (Open Vld) and Minister of European Affairs Koen Geens (CD&V) strongly support the revolution, and are making every effort to get it through.
  • So, also with 38 seats in the House, Prime Minister Sophie Wilmès (MR) will soon be at the EU summit of state leaders leave no room for doubt that Belgium is behind the Commission.
  • After all, technically, the plans fall under the banner of “fighting corona”, for which Wilmès II gained the confidence. But this is how the EU, if the plans come through, a fundamental political and financial metamorphosis and marches towards a strong integration and expansion of European power.

Meanwhile in Belgium: The reopening of education is putting Community relations back on track.

  • Education is one jurisdiction of the federal states, and we will have known that. While in Flanders teachers, pupils and parents are pre-teaching and hang in front of a computer almost every day, or are already in the phase of the cautious and stressful reopening for certain classes, hardly anything happened in French-speaking Belgium.
  • Already All education in Brussels and Wallonia came to a halt for 65 days, and little seemed to happen this school year. This was in contrast to Flanders and was most tangible in Brussels, where many students also attend Dutch-language education.
  • In recent days, the Flemish minister of Education Ben Weyts (N-VA), together with the school umbrella organizations, has again pushed to continue with a reopening: he announced that the schools would open again on 2 June, without much take into account the National Security Council, the federal body, which in principle regulates the exit from the lockdown.
  • That it is convenient for the N-VA to demonstrate that, through ‘their’ Education Department Flanders is pursuing its own course, and it is doing differentlyis quite obvious. But it is not purely a political issue, the frustration about the failure to take decisions at the National Security Council was much broader than just an N-VA minister: the entire Flemish government supported, and the educational umbrella organizations also wanted this.
  • A decision was made scheduled for June 8 Security Council. But with a week and a half preparation time, there was a danger that the schools would never reopen for the summer holidays. The umbrella organizations and Weyts then forced the matter themselves by meeting and involving the GEES, the expert working group, in the matter.
  • After which Weyts with that date of June 2 came, to the frustration of the federal level and its fellow French-speaking ministers. For example, Pierre-Yves Jeholet (MR), the Prime Minister of the French Community, stated that he was bothered by Weyts’ “announcement policy”.
  • Eventually, a meeting of the Consultation Committee suddenly replaced the National Security Council, or so it seemed. Normally such a committee is the forum in which the federal states and the federal government discuss sensitive dossiers, but in this crisis it has increasingly become a method whereby the Consultative Committee apparently takes over the role of the Security Council.
  • Anyway, a typical Belgian compromise rolled out of the meeting last night: the preschoolers can start anywhere on June 2, primary education officially on June 8, although there is again the trick of the “trial day”, so that Weyts can speak of June 5.
  • In addition, the rules on contact bubbles were relaxed, so that each class becomes a silo, so that everyone can return “safely”. Four square meters per student is no longer necessary, something that has been known informally for some time, but has been “formally” endorsed in that Consultation Committee.
  • “I don’t hide the fact that this is the result of a compromise. And I accept all criticism. But when hundreds of thousands of students can finally return to school, that is the essence. With our proposals we have set things in motion ”, Weyts said this morning on Radio 1, where he also “forgiveness early”, for the varying communication.
  • French-speaking Belgium is completely amazed at the sudden turn in the file: a debate about the reopening was not so lively at all and the enthusiasm is less. Education Minister Caroline Désir (PS) immediately opened the door in Le Soir to keep schools closed for longer: “It is up to the organizing body, based on their local reality and specific conditions, to arrange the return, adapted to their abilities. ”
  • The Christian education unions in French-speaking Belgium are also angry: “We are very concerned about the speed with which new measures are now approaching,” Roland Lahaye, head of the CSC-Enseignement, said this morning on LN24. “We have the impression waking up in a nightmare. ”
  • Striking, incidentally, the damage that comes to an end to education. Education economist Kristof De Witte (KU Leuven) talks about an impact of 0.08 percent on GDP in Flanders and even 0.18 percent in Wallonia. “This is how you see the importance of education. That enormous economic impact will weigh on this generation. Moreover, because the economic divide between the two parts of the country will widen further, the further dismantling of Belgium has really encouraged, Says De Witte in Het Laatste Nieuws.

Nothing noticeable: At Open Vld, the expected chair dance will complete.

  • Because Egbert Lachaert (Open Vld) moved to the chairmanship of the party as group leader in the Chamber of Open Vld, there had to be a new numero uno before the twelve MPs come.
  • The man who supported Lachaert through and through during the race now gets his reward: Vincent Van Quickenborne (Open Vld) will be the new group leader. He was also the only candidate and, as it should be, was unanimously elected.
  • Much more than Lachaert, Van Quickenborne evokes aversion at the camp around Bart Tommelein (Open Vld), which lost a lot of the elections. In West Flanders, the latter, the Ostend mayor, has had to give up his position somewhat now, compared to the mayor of Kortrijk. But Van Quickenborne stands for a clearly more hard, right-wing socio-economic line, which others do not aspire to.
  • Until now remains it is remarkably quiet in the camp that was not waiting for Lachaert. That is much more in the Flemish Parliament, and the liberal group there. In the Chamber, almost everyone in the group was on the side of Lachaert, with the exception of leaders Maggie De Block and Patrick Dewael (Open Vld).

Striking in the Flemish Parliament: The majority hold a parliamentary committee of inquiry, with the support of Groen and sp.a.

  • About the approach of the Flemish government and the Flemish administration in the corona crisis are a lot of questions to ask: for example, the residential care centers sounded the alarm bell loud and clear during the crisis. Moreover, there are a lot of deaths in those centers, due to the corona crisis, if we can believe the famous figures of Sciensano.
  • That led in the heat of the moment already to bold statements. Including CD&V chairman Joachim Coens then pleaded loudly and clearly for a parliamentary committee of inquiry to sort out the case, and to ensure that mistakes don’t repeat themselves.
  • But now that the epidemic seems to be subsiding, the political game around such a committee is getting underway. After all, a parliamentary committee of inquiry remains something exceptional: it gives parliament, including the opposition, the power of an investigating judge, who can order investigations such as a search or subject people to cross-examination under oath.
  • The majority of N-VA, CD&V and Open Vld now choose to keep that method. Yesterday in the Flemish Parliament the group leader of Open Vld, Willem-Frederik Schiltz, came to explain Villa Politica: “It’s not the ideal instrument, there has an atmosphere of finger pointing or the scapegoat search. It is also too early to dive into the analysis, the crisis is still going on. ”
  • Schiltz also spoke literally about the “kalashnikov who is such an investigation committee ”: the majority clearly does not want it on its government, and more specifically Minister of Welfare Wouter Beke (CD&V).
  • CD&V, Open Vld and N-VA now throw it up an agreement with opposition parties Groen and sp.a to organize an ad hoc committee who “reviews the Flemish approach to the corona crisis and must make proposals about the postcorona trajectory”.
  • As a sweetener, Björn Rzoska, Groen’s group leader in the Flemish Parliament, is allowed to lead that committee. He immediately announces that it it cannot be ruled out that that committee will one day become a real investigative committee. The intention is to have hearings and that the committee will be ready by the end of 2020.
  • But opposition parties Vlaams Belang and PVDA insist on a full investigation committee immediately. Question is or that demand can be withheldonce things come up.
  • And also the federal game plays a role: there will almost certainly be a full investigation committee. A large number of parties are asking about this: certainly on the French-speaking side, there is a lot of criticism about the approach of the government and, among other things, the role of Minister of Health Maggie De Block (Open Vld). But N-VA also de facto pledged its support for such a committee in Parliament.

Striking to note: Health Minister Maggie De Block (Open Vld) does not take a word back from her tweet, “another drama queen”.

  • Minister De Block, one of the faces in the fight against corona, has already received a lot of criticism for her approach to the corona crisis. One of the stumbling blocks in her reaction is certainly in French-speaking Belgium to virologist Marc Wathelet, who wrote very pessimistic letters at the beginning of the crisis to the government.
  • Because those letters were not answered at the end of February, he published them in the press. “Another drama queenDe Block replied on Twitter. “Every disaster movie starts with the government ignoring a scientist,” Wathelet later stated in tough interviews, in which he was portrayed as a “whistleblower”.
  • I still support that statement“, Says De Block calmly on Radio 1 today.” Yes, I called him a drama queen: the man spoke about the collapse of our health systemthat people would not be cared for, that they would receive health care in the parking lot of hospitals. It never got that far with us, unlike some other countries. ”
  • So the Block stands firm, even though she removed the tweet. “It has sowed some consternation, so I took it away. But my attitude is the same though: instead of making predictions, sow panicso that people would be afraid not to go to the hospital anymore, roll up their sleeves, do something about it. ”
  • So the Block remains quite unmoved by all the criticism. “Now it comes down to avoid that second wave, to do something about it. “

Interesting reading for “informers” Magnette and Rousseau: CD&V comes out of her room. The Christian Democrats take a very clear position on health care.

  • In an opinion piece in De Standaard by party chairman Joachim Coens (CD&V) and his Minister of Welfare Wouter Beke (CD&V), the Christian Democrats put the finishing touches: plans for the re-federalization of health care, which Open Vld advocates, like the greens, and to a lesser extent the socialists, are allowed in the dustbin.
  • Paul Magnette (PS), who is currently leading a self-proclaimed mission with his sp.a colleague Conner Rousseau, announced earlier this week that “Very important political fact” that the Flemish liberals, like the green and socialist families, are in favor of the re-federalization of health care. Immediately Magnette explained that as requirement on the table for the N-VA, to form a federal government together.
  • That requirement seemed more tactical than genuine: the PS itself is not jumping, and Rousseau also put a proposal on the table on Wednesday, through an interview in Knack, which is something else: federal umbrella, but regional responsibilities and financing via envelopes.
  • CD&V is now closing the door completely. Because Beke and Coens literally state that this federalization is “not a good idea”. “Even for simple things like the distribution of NIHDI numbers for graduate doctors, the advocates have been unable to find an agreement for years. In Flanders we have maintained this for years, in order to be able to pursue a good supply policy for doctors and to prevent overconsumption. But if even that doesn’t work, why should the rest succeed? ”
  • They screen with strong numbers to make their analysis: “The life expectancy is on average 2.5 years higher than in Wallonia. Fewer people die from cardiovascular disease, diabetes or antibiotics than in other parts of the country. ”
  • According to Beke and Coens, this is due to the greater commitment to prevention in Flanders“. “The paradox of this situation is that the communities pay for it, but the Belgian state benefits from it. Because fewer people get sick, the pressure on health care is less. ”
  • “An architect of the state structure may think in boxes, but sickness and old age do not. It welfare and health care provision therefore belong at the same government level“, So both conclude, so the Flemish level.
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