It seems that the European Union, or at least the European Parliament is taking action towards the right direction. On Friday, 15th of May, it voted to block any budget that does not include a Euro 2 trillion commitment, that it also includes common debt issuance, the so-called Corona Bonds, as a means of helping European Union countries dealing with the economic effects of the corona virus pandemic.
The motion was supported by the EU parliament’s five largest political groups: the center-right European People’s Party (EPP), the Socialists and Democrats (S&D), the centrist Renew Europe, the European Conservatives and Reformists (ECR), and the Greens/EFA.
The resolution states that the pandemic has affected all 27 members equally and thus funding should be made available to all 27 member states.
In March the leaders of Belgium, France, Italy, Luxembourg, Spain, Portugal, Greece, Slovenia, Ireland and Cyprus have pushed for the issuance of Corona bonds however, the northern member states such as Netherlands, Germany and Austria strongly opposed it.
Each member of the European Union has a veto on fiscal issues, which means a unanimous consent is needed for the proposal to take effect.
The EU parliament has included in the motion a range of new European tax measures including a single set of rules to calculate companies’ taxable profits in the European single market, a financial transactions tax, a plastics tax and a carbon border tax. All those measures have been proposed in one form or another at a European level before.
While the European Parliament does not have any legislative power, meaning the motion is a mere proposal, all of the EU budgets are subject to its approval. Going a step further, the European Parliament stated in the motion that the budget needs its consent and warned not be presented with a budget with a recovery plan that is financed by existing and upcoming programs. In other words, the Euro 2 trillion should be on top of any planned budget.
The ball now sits in the European Commissions court waiting for their response.