The European Union has launched the racing race, but not all member countries seem determined to invest more for the defense, as also asked by the United States of Donald Trump. And for this reason Brussels should think of taxing these states, in order to use their contributions to support other key policies for Europe.
It is the idea that was launched by the Think Tank Bruegel, one of the most important and influential in the European capital. And that could soon start circulating even in the buttons rooms.
“Although it is politically sensitive, this new resource would underline the EU commitment for collective security”, and would also give “EU countries an incentive to align with the common strategic objective of increasing the defense skills, partially distributing the costs of spending on the countries that spend relatively little”, write the authors of the paper.
You need money
The proposal starts from the observation of the fact that the EU needs more resources to finance the green transition, relaunch its competitiveness and also the return of the common debt made for the Nextgenerationau fund. According to the authors of the paper, it would be needed about 0.9 percent of the more gross national income (RNL) more, almost doubled the current EU budget in proportion to the economy.
But since the EU has no tax powers, and its direct revenues are limited and are limited, for example, to revenue related to fines for infringements, while almost all resources come from national budgets. Now the authors propose a new resource: a contribution linked to insufficient expenditure in defense by the Member States.
The Plan for EU REMO
The logic is simple: everyone benefits from security in Europe, but not everyone contributes in the same way to the safety of the blockade. In 2023, military spending went from 0.2 percent of GDP to Ireland to 3.1 percent in Latvia. This disparity generates a “free-ride” problem (as Donald Trump would say), of “scrocco” by some countries that benefit from the efforts of others.
The contribution
For this reason, a “contribution of expenditure in defense” should be introduced, calculated on the basis of the distance between the national expenditure for the defense and a reference value, a value that could be the EU average or a fixed threshold, for example 2 percent of GDP as required by NATO.
Only the countries that spend less than the threshold would contribute. According to the simulations made by the Think Tank, if a threshold equal to the EU average was set and a collection rate of 25 percent, 13 countries would contribute for 8 billion a year, if you choose 2 percent of GDP, the contributions would rise to 30 billion by 21 countries. Although these calculations are made on the expenditure of 2023, which was much lower, and therefore now the final contribution would be less, we still speak of a lot of money.
How it would work
The collection rate of 25 percent represents the percentage that would be applied to the difference between how much a country spends for the defense and the reference threshold. In practice, if a state spends less than expected, it would pay a sort of additional contribution to the EU budget, calculated based on that difference.
If a country spends 1.2 percent of its GDP in defense, and the threshold is 2 percent, it has a 0.8 percent “hole”. The 25 percent tax would apply on this 0.8, and the result would be the figure to be paid to the EU. The more a country is distant from the threshold, the more he pays.
The fixed threshold has the advantage of being more clear (once reached, it stops paying), while the comparison with the EU average guarantees continuous revenues, because it is unlikely that everyone conveys exactly on the same value.
