The EU Finance Ministers have reached an agreement in Luxembourg on establishing a separate stimulus fund for EU countries that use the euro as their currency. The currently proposed fund is a pale shadow of French President Macron’s earlier, larger plans, which called for a substantial fund outside of the EU budget and decision-making processes.

Negotiations over the form and financing of the Budgetary Instrument for Convergence and Competitiveness (BICC), as the budget is officially called, lasted nearly two years. The instrument is intended for structural reforms and investments aimed at strengthening the eurozone, but it is explicitly not a ‘eurozone budget’.

Dutch Finance Minister Wopke Hoekstra has opposed a separate funding stream for eurozone countries from the beginning. Moreover, it was unclear where the money would come from today. According to Minister Hoekstra, there have now been “good steps taken in Luxembourg towards better spending of EU money by linking the budget to reforms.”

Negotiations on the size of the ‘pot,’ which will be funded from the European multiannual financial framework for 2021 through 2027, are yet to begin. However, it is expected that no more than 20 billion euros for seven years will be made available for the nineteen euro countries. Agreements have also been made regarding access to the funds for non-euro countries.

There also appears to be some progress in the Europe-wide implementation of an ‘internet tax’ that France already introduced earlier this year. After failing to reach an agreement within the EU, the French took action themselves. Now Italy has announced it will introduce a tax on ‘cross-border profits.’ According to Italy, taxes should be paid in the country where turnover and profits are generated.

EU countries that hesitated about introducing such a new digital tax previously insisted that such a step should apply globally, and only if that fails should the EU act. Just this week, the OECD’s budget experts announced that such an internet tax is possible.

wobke-hoekstra

Hoekstra Allows Macron a Fund of 20 Billion for Support to Euro Countries

Hoekstra Allows Macron a Fund of 20 Billion for Support to Euro Countries