Whether the European Commission succeeds in introducing its proposed directly levied EU taxes, including a possible EU-wide value-added tax (VAT), in the face of opposition from a number of national governments, remains to be seen.
But we’re still looking at interesting EU times ahead…
In agreeing new sanctions for countries in breach of EU budgetary rules, France and Germany are now calling for a permanent bail-out facility for Eurozone countries, before the current one expires in 2013.
As the Irish Times reports
EU OFFICIALS are making tentative plans for a “convention” next spring to draw up changes to the Lisbon Treaty to establish permanent measures to settle sovereign debt crises in euro-zone countries.
The development, which could lead to another referendum in Ireland, follows the decision of French president Nicolas Sarkozy to back a push by German chancellor Angela Merkel for new legal powers to fortify the EU’s economic system.
There are two strands to their plan, each of them far-reaching.
First, Merkel and Sarkozy want to allow the suspension of EU voting rights from governments that break budget rules. Such a penalty would amount to a political sanction from a country’s European peers, something with inevitable implications for the government concerned in their domestic affairs and European politics generally.
Second, they want to establish on a permanent footing the ad-hoc bailout scheme set up after the Greek rescue for any other distressed euro member. Furthermore, this would include procedures for “orderly” renegotiation of sovereign debt.
Given the upheavals seen in the euro zone this year, there’s nothing intrinsic to either proposal that goes so far beyond the bounds of current practice as to be unacceptable. What is particularly knotty, however, is the fact that they cannot be executed without reopening the treaties.
This presents a host of dilemmas, not least the likely requirement for a referendum in Ireland and constitutional limitations in Austria and Denmark over their governments’ scope for manoeuvre.
While only euro members would be affected by the legal measures themselves, in all likelihood the treaty change would have to be enacted in each of the 27 member states. This means British prime minister David Cameron, whose resistance to any increased powers for Brussels is clear, would be drawn into the debate.
And the BBC’s Gavin Hewitt adds
The euro is now like a heart patient. It has had the big scare. Now it will be subject to scans and stress tests. There will be much closer surveillance. Other countries will be able to insist on healthy behaviour. The eurozone will be monitored like never before.
What is not getting so much attention are the causes of this crisis. Countries with very different economies are harnessed together in a monetary union. Some of those countries used low borrowing costs to finance a boom. Unit labour costs grew. In order to regain competitiveness years of wage and spending cuts lie ahead. And where will growth come from? And how will jobs be found for the 23 million out of work? That is Europe’s real crisis.
To paraphrase Stephanie Flanders, it’s getting even closer to a fiscal union…