Coronavirus crisis: The European Taxpayers’ Association (TAE) warns against the backdoor mutualisation of debt

What critics have long feared is now threatening to become a reality. Under the pretext of tackling the coronavirus crisis, far-reaching changes to European financial and tax policy are set to be implemented on the quiet. The European Taxpayers’ Association (TAE) is issuing a stark warning against the mutualisation of debt, ‘corona bonds’ and tax harmonisation, as well as against the removal of any constraints on the indebtedness of individual EU Member States.

Italian Prime Minister Giuseppe Conte, for example, had called for his country to be provided with unconditional EU aid. This was to take the form of either special EU bonds (coronavirus bonds) or access to largely unconditional credit lines from the European Stability Mechanism (ESM).

The President of the European Taxpayers’ Organisation, Rolf von Hohenhau, fears that the immense mountains of debt in Italy, France, Portugal and Greece will now be passed on to countries with comparatively sound fiscal policies, such as Germany, Finland and the Netherlands.

Von Hohenhau said: “We are acting as if money were falling from the sky. But that is not the case! Ultimately, the citizens of economically strong countries will foot the bill through tax rises. We are burdening our grandchildren with debt, which will then have a tangible impact on their lives and their economies. That is not fair. I am furious that they want to exploit the crisis to push through fiscal policy decisions which they have so far shied away from for fear of resistance.”

The President of the Taxpayers’ Association went on to explain that the European Commission had already announced it would apply the greatest possible flexibility to the debt rules, and that the ECB, with its latest bond-buying programme, had also ensured favourable refinancing conditions in the Member States. There is no discernible reason for joint liability. Instead of talking about mutualising debt, the EU Member States should first take all necessary measures within their own countries to help people and businesses get through the coronavirus crisis.

In conclusion, Rolf von Hohenhau, President of the Taxpayers’ Association, appeals to all EU heads of state and government: “Please do not think only of financial aid during the coronavirus crisis. Cut taxes – especially now, during the crisis – and thereby ease the burden on citizens and businesses. Boost purchasing power and create the best possible conditions for future growth.”

Brussels, 27 March 2020