RESOLUTION | A fiscal capacity to achieve our ecological and competitiveness objectives

Adopted by the Federal Committee of UEF, Budapest, 16 November 2024

The UEF Federal Committee, meeting in Budapest on 16 November 2024

Recalls:

- that member states and the EU agreed in 2015 on the Paris Agreement to keep global warming below 1.5°C and to tackle the effects of climate change;

- that member states agreed in 2022 on the Kunming-Montreal Global Biodiversity Framework (GBF) to reach the global vision of a world living in harmony with nature by 2050 including 4 goals: Protect and restore, Prosper with nature, Share benefits fairly, Invest and collaborate;

- that the European Green Deal aims to make Europe the first climate-neutral continent by 2050. The reduction of greenhouse gas emissions by 55% by 2030 compared to 1990 levels represents a critical milestone in achieving climate neutrality by 2050. Achieving those target to respect the Paris Agreement;

- that the implementation of the European Green Deal presents several complex challenges, especially in the areas of social cohesion, political consensus, and economic competitiveness. These challenges must be carefully addressed to ensure a transition towards climate neutrality that is inclusive and sustainable, without compromising social or economic stability;

- that the consequences of climate change and the loss of biodiversity already affect our societies generating new costs, to adapt on the one hand, as well as to repair after disasters (floods for instance) or support affected population (poor harvest for farmers for instance) on the other hand;

Notes:

- that the Draghi Report points the need for the EU to invest € 800 billions per year to catch up other continent as the United State and China in terms of competitiveness and ecological transition;

- that our dependencies on fossil resources and their growing costs (such as energy) are an obstacle to our competitiveness as highlighted by the Draghi Report. Ecologic transition, decarbonation and reduction of our dependencies offers us the opportunity to unleash our economic potential and to be at the forefront of the new economy (in the context of ecologic crisis);

- that although the European Union has numerous objectives and significant competencies, it does not have a genuine fiscal capacity. This means that, unlike a federal state, the Union does not have the power to levy taxes, collect substantial revenues, and directly decide public spending;

- that the lack of a true fiscal capacity significantly limits the European Union's (EU) ability to finance ambitious policies, and this makes particularly problematic the protection of European public goods, such as the environment and the fight against climate change;

- that, in particular, environmental policy objectives, such as those set by the European Green Deal, require massive public investments that, without an autonomous fiscal capacity, are challenging to achieve effectively and in a coordinated manner;

Stresses:

- that, in general, the absence of autonomous fiscal capacity limits the Union's ability to mobilize the necessary resources to compete globally with the United States and China and to invest in its ecological transition;

- that due to the lack of a common fiscal policy, the EU relies heavily on the national budgets of Member States for most investments. This creates fragmentation that prevents Europe from adopting a centralized and coordinated spending strategy, as seen in the United States and China.

- that while the introduction of Next Generation EU has provided an effective response to the COVID-19 pandemic, these funds—given their temporary and limited nature—cannot be considered a structural solution to the competitiveness deficit problem.

- that to address these challenges, the Draghi Report suggests several measures and initiatives that could improve the EU's competitiveness. It is crucial to increase the EU's ability to raise funds and invest in strategic projects through greater fiscal integration. This could include the introduction of new own resources for the EU, such as European taxes on digital services or financial transactions, in addition to the possibility of issuing common debt on a permanent basis.

- that the development of sufficient fiscal capacity inevitably requires a treaty reform. For the EU to equip itself with a significant and stable fiscal capacity, an adjustment to institutional and decision-making rules is indeed necessary, particularly regarding the abolition of unanimity decisions in the Council and the involvement of the European Parliament;

Therefore, calls on:

-  the European Commission, the European Parliament and the Council to work towards providing the Union with own resources in the preparation of the Multiannual Financial Framework 2028 - 2034

- the three institutions to provide the Union with its own fiscal capacity by agreeing on a reform of the decision-making mechanisms, through a Treaty reform.