89% of EU: “We will collect windfall tax”… Review of upper line pasta price cap
“Recently, the Spanish coalition government decided to extend the application period of the temporarily introduced windfall tax for two years until next year. “Due to the war in Ukraine, loan interest rates and energy prices have risen, so we are in desperate need of help for the vulnerable.”
Angeles Sancho Martinez, Assistant to the Deputy Minister of Economy and Digital Transformation of Spain, said this in a written interview with the Dong-A Ilbo on the 28th of last month. Advisor Martinez also disagreed with the point that this policy imposes a double tax burden on companies that pay corporate taxes. He explained, “Banks and energy companies have benefited greatly from the current situation, so it is justified to impose a windfall tax on them,” and added, “Major European Union (EU) countries have also already introduced windfall taxes.” .
● 89% of EU member states “will collect a windfall”
As the burden on the public increases due to high inflation and interest rates following the pandemic, major developed countries, including Europe, are pursuing ‘populism’ (populism). Among them, the number one measure that each country is considering is the ‘windfall tax.’ According to KPMG and the U.S. Tax Foundation, about 89% (24) of the 27 EU member states have imposed or plan to impose windfall taxes on domestic banks and energy companies. Since early last year, when the U.S. Federal Reserve began to raise interest rates in earnest, there have been more than 30 cases where windfall taxes have been introduced and proposed across Europe.
As tax revenue decreases due to the economic downturn, more drastic policies are being introduced in European countries to make up for it. Starting next year, Venice, a tourist city in Italy, will charge an entrance fee of 5 euros (about 7,000 won) for day-trippers who stay for only one day. If you do not pay the entrance fee, you will be subject to a fine of up to 300 euros (about 425,000 won). In Italy, the pasta price increase rate in June was higher than the inflation rate, and as citizens’ opposition grew stronger, the government considered a ‘pasta price cap’.
Far-right populism is also on the rise. In the early general elections in the Netherlands on the 22nd of last month, the Liberal Party, which took the anti-immigration stance, won an overwhelming victory. Geert Wilders, leader of the Liberal Party, argued that the housing crisis in the Netherlands was due to an influx of refugees and immigrants and made strong anti-immigration pledges, including strengthening border controls and detaining and deporting undocumented immigrants. In major countries such as the UK, France, and Germany, populist policies opposing refugee inclusion or climate change response are gaining popularity in the political world.
● European economy bruised by extreme populism
The reason why European countries do not shy away from such ‘anti-market policies’ and are trying to survive independently is because the economic situation is not easy. As the people’s living hardships increase due to high inflation and rising energy prices, unreasonable policies are being implemented to appease public opinion and gain public support.
As high interest rates and high inflation continue for a long time, and wars between Russia and Ukraine and Israel and Hamas continue, the European economy is literally at a standstill. The EU’s economic growth rates in the first quarter (January to March) and the second quarter (April to June) of this year were 0.0% and 0.1%, respectively, but fell behind to -0.1% in the third quarter (July to September). The European Commission lowered its economic growth forecast on the 15th of last month, saying, “Consumer purchasing sentiment has weakened due to high inflation, and the Eurozone economy has lost growth momentum as companies are reluctant to borrow and invest due to the European Central Bank (ECB)’s base interest rate hike.” “He diagnosed. The European Center for International Political Economy (ECIPE), a non-profit research institute in Belgium, said in a report, “If the current trend continues until 2035, the gap in GDP per capita between the United States and Europe will be as wide as the difference between Japan and Ecuador today.” “It was also predicted.
Lee Chang-min, a professor of business administration at Hanyang University, said, “We are in a hurry to quell the anger of citizens who have found it difficult to make a living amid high interest rates and high prices,” and pointed out, “There is no leadership or economic policy in Europe to respond to the complex crisis.”