EU countries set their tax rules

The European Council issued a statement at the end of the meeting of the finance ministers of 27 member countries in Brussels.

The statement recalled that within the framework of EU agreements, member countries see economic and fiscal policies as a common theme and will coordinate them.

Noting that the member states have accepted the main guidelines regarding the reform of the fiscal framework, it was emphasized that the reference values ​​will not be changed if the budget deficits of the member countries in the EU agreements do not exceed 3 percent. of its GDP and public debt does not exceed 60 percent of its GDP.

In the statement, it was noted that the new economic governance framework will ensure more effective, efficient and sustainable compliance with these benchmarks.

Noting that all member countries will present medium-term national fiscal structural plans after the reform, it was reported that the plans will cover fiscal policy, reforms and investments.

In the statement, it was indicated that the processes that occur in case of violation of the 3 percent budget deficit criterion in the current rules will not be changed.

Noting that the medium-term national plans of countries with a public debt-to-GDP ratio of more than 60 per cent should ensure that this debt ratio is reduced sufficiently, it was stated that in case of violation of the debt criterion, the excess will start the deficit procedure.

In the statement, it was indicated that countries with low public debt will also follow a fiscal path to keep their budget deficit below 3 percent, and when it comes to investments in strategic priorities that increase growth, strengthen public finances, contribute to green and digital transformation or increase defense capacity, the public sector It was reported that it could use more time to reduce its debt.

Full details of the new tax rules have yet to be determined. Discussions on fiscal rules among member states will continue.

According to EU rules, member states’ budget deficits must not exceed 3 percent of their GDP and public debt must not exceed 60 percent of their GDP under normal conditions. When this limit is exceeded, the EU Commission must be notified of the measures to be implemented and an effective fight must be carried out.

However, EU member states decided to suspend the rules in 2020 due to the Covid-19 outbreak and rapidly increased their budget deficits and public spending. This practice continued with the Russia-Ukraine war and the energy crisis.

Among the EU member states, the countries with the highest ratio of public debt to GDP are Greece with 178.2 percent, Italy with 147.3 percent, Portugal with 120.1 percent, Spain with 115.6 percent. , France with 113.4 percent and in the case of Belgium with 106.3. Even in Germany, Europe’s largest economy, this rate is 66.6 percent, above the EU limits. (AA)