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What Salvini and Le Pen Get Wrong About Europe

What Salvini and Le Pen Get Wrong About Europe

(Bloomberg Opinion) -- Right-wing populists like Italy’s Matteo Salvini and France’s Marine Le Pen love to bash the EU as an elitist project that’s out of touch with the general public. Le Pen dreams of abolishing the European Commission, which she considers undemocratic, while Salvini says “bureaucrats and bankers” control Europe.

This is all largely grandstanding; both of these leaders have had to walk back their threats to quit the euro or the EU because Italian and French voters would rather stay put (doubly so after the U.K.’s Brexit fiasco). But they’re wrong anyway about Brussels merely serving the elite. The Commission has been coming up with plenty of popular ideas around regulation, banking and taxation. It’s just that national governments – so venerated by Le Pen, Salvini and their ilk – have blocked them when they brush up against economic or political self-interest. 

Brussels’s recent initiatives include clamping down on tax-dodging multinationals, better regulation and taxation of giant technology firms, and targeting a climate-neutral economy. All of this involves the extra red tape that the populist right so despises. It’s far from elitist, though, to challenge the monopolistic practices of big tech, to try to get companies to pay their fair share, and to want to make the planet cleaner. Nor is it undemocratic to suggest that some of these challenges might be better tackled at the supranational level.

The Commission’s top official for economic affairs and tax, Pierre Moscovici – singled out by Salvini as an “enemy” of Europe – has been at the forefront of many of these plans. When I caught up with him last week to discuss the general mood ahead of the European Parliament elections, where the far right is expected to do very well, he singled out a harmonized EU approach to taxation as a key answer to populism. That may sound cold and bureaucratic, but in his view it’s the best way to make sure Europeans don’t feel the system is unfairly stacked against them.

Tax has been an ongoing battlefield for the former French finance minister. In 2016, after the Panama Papers leaks about tax havens embarrassed political figures (costing Iceland’s prime minister his job), Moscovici called the scandal an “extraordinary political opportunity” and led the push for an EU tax-haven blacklist, common sanctions, more transparency, and the exchange of information between EU states.

He doubled down recently by shifting his attack to corporate tax evasion and the sense that Europe is losing its “fiscal sovereignty” by letting large companies get away with their current practices. Unfortunately, Moscovici has been blocked on his later proposals at every stage by powerful opponents: The EU’s member states. Even he concedes that the only way to force the tax changes through would be to drop the requirement for unanimity among the bloc’s nations when voting on proposals from Brussels.

So it’s clear that national governments are really running the European show, whatever the euroskeptics claim. Moscovici’s call for an EU-wide tech tax fell victim to push-back from Sweden, Denmark and Germany. Even France resisted an EU financial transactions tax for fear of losing business in the post-Brexit race with London. Similarly, Moscovici’s ambitions for a euro zone budget – which he describes as a “work in progress” – have been watered down by the Dutch.

This is why his quixotic call for a majority vote approach to tax matters is so revealing about how the EU works, and probably won’t get off the ground. The countries blocking tax harmonization, such as Ireland, do so out of their own self-interest and they won’t be in any hurry to give up their power of veto. Never mind that this is sometimes harmful to other member states, as you can see from Ireland’s alleged granting of sweetheart deals to Apple Inc., which cut the company’s effective tax rate to 0.005 percent. 

Polls from the Commission suggest European citizens want a more interventionist EU when it comes to fighting tax fraud, regulating tech companies, and cutting carbon emissions. If this doesn’t happen, they shouldn’t blame Brussels.

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.

©2019 Bloomberg L.P.