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EUROPEAN UNION

One tax to rule them all: How Macron sees the future of the EU

From taxes on internet giants to six-month stints for European students in neighbouring countries, French President Emmanuel Macron set out wide-ranging proposals for EU reforms on Tuesday. And he even believes there is a place for the UK.

One tax to rule them all: How Macron sees the future of the EU
Photo: AFP

New bodies, less bureaucracy

Macron pitched a less bureaucratic, simplified European Union — saying that when he was done with his reforms, he could not imagine Britain not wanting to be a part of the union.

He outlined an ambitious overhaul of the institutions of the 19-member eurozone, giving it its own finance minister and a budget that could be invested on infrastructure and other big projects.

These ideas previously had the cautious backing of his key European partner, Chancellor Angela Merkel, but that was before Germany's election in which Merkel's party suffered heavy losses at the hands of eurosceptics.

Beyond the eurozone, Macron suggested a string of new organisations, some of which have already been mooted by the EU.

He called for a European prosecutor to investigate cross-border terrorism and for a new EU-wide asylum agency — reprising ideas put forward by the European Commission.

He also proposed a new border police force to deal with the migrant crisis and oversee the return of failed asylum seekers. It was not clear how such a body would work with the EU's current border guard and coastguard force.

And he wants a new innovation agency that would work on developing technologies like artificial intelligence.

More broadly he said Europe was already “multi-speed” — with some countries seeking closer integration than others — “and we shouldn't be afraid to say this and to want it”.

Closer defence ties 

Macron proposed setting up an armed “rapid response force” to defend the EU as well as a shared defence budget and common military strategy.

The bloc approved the idea of a rapid response force a decade ago but it was never deployed. Macron would want to see it relaunched by 2020.

Separately he is seeking a joint EU civil defence force that could respond to natural disasters such as the hurricanes that hit European overseas territories in the Caribbean in recent weeks.

Big tax plans

Macron devoted a significant part of his speech to setting out ideas for tax reforms, seeking to harmonise rules across the EU.

In a move likely to raise ire from low-tax countries like Ireland, he proposed a single corporate tax band by 2020, saying members who refused to implement it should have their aid from Brussels cut.

Macron also wants a new type of tax on technology giants like Facebook and Apple, based on how much value they create in a country rather than the profits they record there.

And he called for a tax on financial transactions to pay for overseas aid, reigniting a long-running debate on expanding a levy already in place in France and Britain.

Finally, he wants a carbon tax on highly-polluting products entering Europe, as well as on industries that burn a lot of fossil fuels within the bloc.

Youngsters around Europe

Young people were at the heart of the speech, with Macron saying he wanted all students to spend six months in another European country learning their language and culture, and exploring the landscape.

The continent should aim for all students to speak two European languages by 2024, he said, proposing new European university networks that would make it easier to do bilingual degrees and study abroad.

More democracy

Macron wants “democratic conventions” organised across Europe within the next six months, to spark national and local debates around what citizens want from the EU.

He also wants transnational lists of MEPs from 2019 — using the quota left behind by Britain when its lawmakers head home after Brexit — with half of parliament to be elected from these lists from 2024.

EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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