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More Brussels, less Berlin?

The European Union (EU) is in crisis. Europe is antisocial, according to one of the numerous accusations. EU institutions are putting Member States under competitive pressure, says another one. On the occasion of the Max Planck Day 2018, Prof. Dr. Dr. h.c. Wolfgang Schön, Director at the MPI for Tax Law and Public Finance, and Prof. Dr. Ulrich Becker, Director at the MPI for Social Law and Social Policy, therefore addressed the question of what taxes and social benefits might look like in the Europe of tomorrow. Should more competences be transferred to Brussels or should many be (re)relocated to Berlin?

Ulrich Becker drew the attention of the approximately 100 visitors to the asymmetry inherent in the EU in the legal foundations of (strong) economic rights on the one hand and (weak) social rights on the other. However, not a single national benefit system has come under significant pressure from the application of fundamental economic freedoms. Therefore, there is no evidence of a crushing effect of market integration, but rather of a socio-political enrichment of Union law. However, it should not be overlooked that the legal responsibility of the Member States for benefit systems is limited by the budgetary discipline imposed by Europe. The European model must therefore prove itself capable of learning. One step in this direction could be the creation of a European unemployment insurance system. It is an anti-cyclical stabilisation programme designed to compensate for cyclical weaknesses which, in an economic area, affect the Member States unequally and can only be combated effectively and autonomously by them to a limited extent. However, the implementation of possible proposals is proving difficult, explained Becker.

With regard to taxes, Wolfgang Schön stressed that the EU does not have its own tax power. The influence of the EU on the tax law of the member states is also limited. Tax harmonisation in Europe requires – with few exceptions – the agreement of the governments of all Member States, which is difficult to achieve due to its heterogeneity. However, a great deal of progress has been made in harmonising legislation in the area of VAT. Two main points could be put forward as arguments in favour of further tax harmonisation: First, economic decisions would no longer be taken on the basis of tax considerations. Second, stable tax revenues could ensure the financing of the welfare state. The argument against further harmonisation – and thus for more tax competition – would be that states would be able to create investment-friendly framework conditions and would be forced to adopt an economical budget economy. Finally, Schön raised the question of whether an EU tax would increase the acceptance of the EU and political participation – according to the guiding principle: “No Representation without Taxation”. Among the visitors, however, doubts prevailed as to whether such a measure in favour of “more Brussels” is currently suitable for strengthening the EU.           Julia Hagn