My article "Financing defence in times of war: Switzerlands' conditional power to tax and insights for the European Union" has just been published #openaccess in the Journal of European Public Policy and is available here:
https://lnkd.in/dukJNnwE
We are living in a time of massive defence spending. But do we have enough resources? Some European countries almost certainly do not, and in any case, even if they do, in the coming years they might be forced to make cuts to health care, education, and pensions, just to name a few examples.
The #EU, too, does not have sufficient resources. The 'Security Action for Europe' (SAFE) policy instrument, approved in May of this year, provides for €150 billion that can be lent to the member states to jointly procure defence equipment, such as air and missile defence, ammunition, tanks, artillery systems, and drones. However, this money may not suffice, and in any case these loans place a burden on the member states, which must repay them.
Hence, today’s EU seems to be confronted with a significant fiscal challenge: to find additional resources for defence, while being exposed to a security crisis epitomized by various ongoing conflicts around the world, especially Russia’s aggression against Ukraine.
In this context, the political debate over which measures to adopt, and how to communicate them to the public, becomes crucial. This is especially true when it comes to allocating new resources to the EU, a matter that is highly salient politically. Member states fear that creating a stronger #fiscal #capacity at the European level would mean ceding parts of their national fiscal #sovereignty. But is this necessarily so, or can fiscal sovereignty exist simultaneously at multiple levels?
Comparing the EU with fiscally decentralized multilevel governance systems does not mean that we should copy them, but that we can learn something useful from them.
Through discursive institutionalism, I examine the political debate that took place in Switzerland in 1915, when the country faced a #security #crisis (World War I) in some respects similar to the one the EU is confronting in 2025 (the Russo-Ukrainian war). Both 1915 Switzerland and 2025 EU have a weak central fiscal capacity which mainly consists of contributions from the units and customs duties. They can issue debt but a central power to #tax is legally impossible and politically a no-go for both systems.
From the Swiss debate on ‘defence taxing’ the EU can learn that, in multilevel governance systems, fiscal problems can be solved, and tax taboos can be broken, provided that they are carefully debated – legally, economically and politically – in terms of benefits and disadvantages for the units, for the centre, and for their relationship.
This is the first article appearing in our special issue "State and future of European Union fiscal integration", guest-edited by Tomasz P. Woźniakowski, Eva Thomann and me.
