How can we prevent Europe from sinking into a dramatic recession? On Monday 18 May, Angela Merkel and Emmanuel Macron proposed that the European Union should raise €500 billion in common debt to help the regions and sectors most affected by the crisis. The German Chancellor and the French President surprised many with their powerful, clear and coherent plan. A taboo has been broken and a very important step has been taken to prevent Europe from rolling into chaos.

But the Plan has three major weaknesses: its volume, its duration and its political acceptability. €500 billion over three years is the equivalent of 1% of the Union’s GDP each year. This is a far cry from the “Recovery Plan of up to 5% of GDP” requested by Dieter Kempf, President of the BDI (the German employers’ association), Geoffroy Roux de Bézieux of MEDEF (the French employers’ association), and Vincenzo Boccia of the Italian Confindustria.

The duration? A two- or three-year plan certainly makes it possible to get out of the emergency. But this duration is too short because, if we analyse the recovery plans implemented in Japan since the 1989 crisis, we can see that each time the government stopped its Recovery Plan, Japan fell back into recession or 0% growth. And since the current crisis is more serious and more global than that of 1989, coming out of the trap will be more difficult and take even longer.

Last but not least, some countries categorically refuse to carry a common debt. They have been told that repayment of the 500 billion would be in proportion to what they pay into the Union’s budget. In Amsterdam, Mark Rutte refuses to pay the €25 billion that will be asked of the Netherlands. And Mette Frederiksen is totally hostile to the idea of Denmark putting an extra euro into the common pot.

How can we unlock the situation? We must remember what F.D. Roosevelt did when he came to power in 1933. The country was devastated by the Great Depression. To create millions of jobs, Roosevelt decided to give himself the means to succeed: between 1929 and 1939, the US federal budget triples. It’s not a 10% or 20% increase. No: The federal budget triples! And it works: while Europe slides into barbarism, Roosevelt creates millions of jobs and saves democracy.

Roosevelt triples the federal budget

Roosevelt triples the federal budget, but he wants a balanced budget. To do so, he created new fiscal resources. Those who accumulated colossal fortunes before the crisis must contribute to the revival of the economy! He created a federal tax on profits, a tax on the incomes of the richest… Millionaires are outraged “Roosevelt is creating taxes. Roosevelt is a communist!” But Roosevelt stands firm.

Millionaires hate him, but the people is with him: Roosevelt will be the only President to be elected four times in a row. He who was paralyzed will allow millions of men and women to rise up and regain their dignity.

Of course, in the first years, Roosevelt accepts to make debt (like Merkel and Macron today) but, as his Plan is massive and sustainable enough, he manages to revive the economy. And after a few years, the budget would have been balanced if it hadn’t been for Pearl Harbor and the entry into the war.

We must act like Roosevelt: triple the Union’s budget and create new fiscal resources at European level. That is why, so that the initiative launched by Angela Merkel and Emmanuel Macron can prosper, we are asking the European Commission to open negotiations on the creation of three new resources without delay.

It is time to create a Financial Transaction Tax (FTT). Each of us, when we buy goods and services, pay VAT. No Member State can have VAT below 15.5%. Except for basic necessities. But even for water and food, the poorest must pay 5.5% to contribute to the collective effort.

Why then a 0.0% tax for those who buy stocks and bonds in financial markets? Are these financial assets more essential to life than water or food? Are those who buy them poorer than the most vulnerable households? No. Obviously not. This is nonsense!

Why 0.0%?

On 28 September 2011, the Barroso Commission took up the idea of a Tobin Tax (named after its inventor, James Tobin, Nobel Prize winner in economics in 1981) and noted that “EU Member States have committed € 4.6 trillion to bail out the financial sector during the crisis. In addition, the financial sector has benefited from low taxes in recent years. The financial sector enjoys a tax advantage of approximately €18 billion per year because of VAT exemption on financial services. A new tax on the financial sector would ensure that financial institutions contribute to the cost of economic recovery and discourage risky and unproductive trading.”

The banking lobby did everything it could to block negotiations. In 2014, Angela Merkel went to London to convince British leaders. To no avail! But if we now understand that the recession is bringing us to the brink unless the EU is able to finance a vast Recovery Plan, we can decide that it is no longer the banking lobby that decides our fiscal policy and that we can create as soon as possible a new EU own resource. We could call it the 2011 Tobin Tax to differentiate the 2011 European Commission proposal from other FTT scenarios that are either too radical or too watered down.

The 2011 Tobin Tax would bring in €50 to 60 billion per year

Despite the economic crisis, the 2011 Tobin Tax can generate significant revenues: the economy has been virtually at a standstill for the last two months, but this is not the case of financial markets, which rose by 20% between 18 March and 18 April (after a sharp fall in February). The volumes traded are very high. Despite Brexit and despite the crisis, the 2011 Tobin Tax can bring in between 50 and 60 billion per year. From 2022 onwards.

We must also be inspired by what Roosevelt did to fight fiscal competition (Florida lowered its income tax, then Texas lowered its tax…). To stop this race to the bottom, Roosevelt created a federal profit tax.

Forty years ago, the average profits tax rate in Europe was 45%. Because of intra-European fiscal dumping, it has now fallen to 20% while, from Roosevelt to Trump, the US federal tax on profits remained at 38%.

Creating a European Tax on Profits

Already in 2005, Jacques Delors stated that a European tax on profits should be created. Fifteen years later, it is time to create a tax that could be progressive, would not affect small businesses and would depend on the evolution of the carbon emissions of companies.

The European Tax on Profits could be initially applied to large digital corporations and would only gradually be applied to all companies (except small companies) from 2023 onwards. If the Recovery Plan is massive enough and the economy is revived, a 5% profits tax could, in a “normal” year, bring in between 70 and 80 billion euros.

Negotiations must also be launched on a third resource: a tax on billionaires. It is not a question here of taxing those with assets of €700 000 or €1 500 000, but of taxing billionaires and multi-millionaires.

The number of billionaires has tripled in 10 years,” noted Forbes in his April 23, 2020 edition, pointing out that “4 of the 10 countries with the largest increase in the number of billionaires since 2010 are in Europe”.

The revenues of this tax on the wealth of European billionaires and multi-millionaires could be fully allocated to the fight against climate change. We could call it the Francisco Tax, in tribute to Pope Francis who never ceases to call for the birth of a society more respectful of the dignity of all and the beauty of the Planet.

The Billionaire Tax would finance the ecological transition

The work of Thomas Piketty, Gabriel Zucman and their colleagues shows that, with a progressive amount ranging from a 1 to 3%, a tax on the wealth of billionaires and multi-millionaires (more than 2 million euros in assets) could generate around €150 billion per year. The Billionaire Tax would only be applied beyond the first 2 million: someone with €2,200,000 would only pay 1% of €200,000, or €2,000 per year (0.01% of their capital).

Zucman underlines that Germany created a wealth tax to pay off its war debt, and that in Switzerland there is a wealth tax which amounts to 4% of federal tax revenues and 8% of cantonal revenues. Why is this topic taboo in some EU Member States?

2011 Tobin Tax, European Tax on Profits and Billionaire Tax… These three new resources alone would make it possible to triple the budget of the European Union. But there is nothing preventing us from making progress on the creation of other resources as well (Digital Tax, Carbon Border Adjustment Mechanism, Plastic Tax…). They will have much lower returns but will obviously be useful if we want the Union to pay back the debts it will incur in the short term in 15 or 20 years’ time.

These three new resources would help unblock negotiations by reassuring Mark Rutte and Mette Frederiksen: not only will we not be asking each Member State for an extra euro to top up the European budget, but each State (each of our regions, each of our towns and villages…) will benefit from green investments, financed by fiscal resources that national governments would have never been able to create on their own.

Reviving, transforming and creating 5 million jobs

In contrast to 2008, when the economy was relaunched without being changed, we must now revive the economy by accelerating its metamorphosis that will make it possible to achieve carbon neutrality by 2050 at the latest.

With the COVID-19 crisis, we have just had a few grim weeks, but we all had drinkable water. What will happen if the climate crisis worsens and if, in 20 years’ time, the water table in some cities is empty for several weeks? Forgetting the climate and biodiversity crises would be irresponsible.

Especially because, financed by these 3 new resources, a real Climate and Employment Pact could create 5 million new jobs and give several hundred euros of additional purchasing power to all citizens every year by reducing energy and mobility bills.

“World peace can be safeguarded only by creative efforts commensurate with the dangers that threaten it.” In May 1950, Schuman and Adenauer made a revolutionary decision: By pooling coal and steel reserves, they make war impossible. In France, Communists and Gaullists are furious. In Germany, shareholders were also furious because they learned in newspapers that their companies were to be “Europeanized”. But it doesn’t matter. Adenauer would later say, “It was the most beautiful day of my life. I saw the sky open up in front of my eyes.”

Seventy years later, world peace is again threatened if the planet sinks into a recessionary spiral with dramatic consequences, or if we are not able to stop climate change. In 1950, Europe was born with the Coal-Steel Union. In 2020, it can be reborn with a Climate and Employment Pact, financed by new own resources.

Mrs von der Leyen, at a time when despair looms over millions of EU citizens, it is your responsibility to push the Heads of State and Government to take a historic decision that will allow everyone to see that there is light at the end of the tunnel.

“Europe will be forged in crises and will be the sum of the solutions adopted for those crises”, said Jean Monnet in 1954. To avoid chaos, Madam von der Leyen, be Schuman. Be Adenauer. Madam von der Leyen, be Roosevelt!


Jean-Luc Crucke, Minister of Finance and Budget of Wallonia (MR, Renew Europe),
Erik Bergkvist, Swedish MEP, S&D, Member of the Budget Committee,
Margarida Marques, Portuguese MEP, Co-Rapporteur for the EU Multiannual Financial Framework (MFF),
Eider Gardiazabal Rubial, Spanish MEP, Coordinator in the Budget Committee,
Elisabetta Gualmini, Italian MEP, S&D, Co-Rapporteur for Own Resources,
Pierre Larrouturou, French MEP, General Rapporteur for the EU Budget 2021,
Maria Joao Rodrigues, President of FEPS (European Foundation for Progressive Studies), Former Minister of Labour of Portugal,
Paul Magnette, President of the Belgian Socialist Party, Former Minister President of Wallonia,
Olivier de Schutter, Professor at UC Louvain and UN Special Rapporteur on Extreme Poverty and Human Rights