Armstrong Economics Blog/European Union
Re-Posted Oct 22, 2017 by Martin Armstrong
France’s President Emmanuel Macron is calling for a radical restructuring of the whole EU. Macron has presented his map for the EU into 2024. He is proposing that the Eurozone budget must include a joint force for military operations. Macron intends to finance this new budget with its tax – the “EU tax” he calls it.
Macron has looked at the numbers and see that France will go the way of Greece if something is not changed and soon. Macron hopes just to throw all the rotten eggs into one basket and hope nobody will notice. It’s the Three Musketeers – All for one; One for All just times 28.
Germany is still dominated by its misunderstanding of the Hyperinflation. Former Greek finance minister Yanis Varoufakis supports Macron’s federalist proposals on the euro single currency but believes only a real threat could make Germany budge on the issue. It has been Germany that opposed the consolidation of the debts to form the Euro. They are trying to remain isolated in their austerity posture refusing to budge on the debt consolidation, while at the same time they want the single currency to facilitate German exports eliminating foreign exchange risk among other members. They just cannot have it both ways.
The extent of Macron’s plan goes beyond just an EU Tax. He also says that Europe is moving at “different speeds” and that those states which fall behind should not stand in the way of his proposals. He is calling for a European defense budget and a standard minimum rate for company taxes.
Macron has noted the high cost of taxing the rich. The Socialist agenda under Hollande imposed a wealth tax which drove 10,000 people with about 35 billion euros to flee the country. And that is just what they admit publicly. The tax was imposed on personal assets of more than 1.3 million euros is part of Macron’s reform, but the socialists are demanding they be taxes even more until they all leave one must assume. As promised by President Emmanuel Macron in the election campaign, the tax will now only apply to real estate, meaning other forms of wealth such as shareholdings in companies will be exempted. Macron realizes that the French share market has one of the worst performance in Europe next to Greece. While the world is worried about bubble markets, Macron is concerned that new lows will unfold on the next crisis.
Apart from the new EU tax, Macron did not make any funding proposals for his very far-reaching program. The FT reported his “wish list” and presented the most desired demands of Macron:
- EU intervention group and budget by 2020
- a European Intelligence Academy to train spies
- a European civil protection group for responding to disasters
- a European prosecutor for terrorism and organized crime
- a European asylum seeker for the joint processing of claims, common procedures
- a European border police
- a carbon dioxide tax levied on imports into the EU
- a European innovation agency for the investigation of artificial intelligence
- EU subsidies to support the development of electric vehicles
- Taxation of US tech companies with a tax on sales, rather than on profits
- a larger EU budget to finance investments and dampen economic shocks
- Review of agricultural policy and the new EU Food Authority
- accelerated harmonization of corporation tax bases
- gradual harmonization of corporation tax rates and social security contributions
- a guaranteed minimum wage for each country
- all young Europeans will be able to spend six months as a student or trainee in another EU country
- Creation of European universities on the basis of networks of institutions
- six-month series of national and local conventions to discuss the future of Europe
- half of MEPs to EU Parliament is to come from EU-wide lists until 2024
- a much smaller European commission, only 15 commissioners
- a Europe of different speeds, to which Great Britain could also return
- a new European prosecutor ensures that the competitors comply with the EU rules
- a Franco-German cooperation agreement focusing on the harmonization of company regulation