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The Coexistence of Fiscal Sovereignties: The Post‐Pandemic European Union in Comparative Perspective
[journal article]
Abstract Thanks to the recovery fund Next Generation EU, the EU considerably increased the size of its fiscal capacity by increasing its borrowing power. Yet, the post-pandemic EU has left the key issue of how to distribute fiscal sovereignty across the EU and the member states unsolved. Departing from influ... view more
Thanks to the recovery fund Next Generation EU, the EU considerably increased the size of its fiscal capacity by increasing its borrowing power. Yet, the post-pandemic EU has left the key issue of how to distribute fiscal sovereignty across the EU and the member states unsolved. Departing from influential concepts in the political science literature, this article argues that we still lack a thorough analytical framework to operationalise the coexistence of two fiscal sovereignties - the fiscal sovereignty of the centre (here, the EU) and the fiscal sovereignty of the units (here, the member states). By resorting to comparative federalism, the article first operationalises fiscal sovereignty as the power to collect, administer, and spend resources. A level of government (the centre or the units) is fiscally sovereign if it can decide on its revenues, the administration of its resources, and its expenditures alone or together with the other level of government (what I call "fiscal self- or co-determination"). The coexistence of fiscal sovereignties becomes impossible if one level systematically and unilaterally encroaches upon the other ("fiscal out-determination"), as is still the case with the post-pandemic EU. On the contrary, in a union of states by aggregation like the EU - namely, Switzerland - the centre (Confederation) has its own fiscal powers, while the units (cantons) retain most of their fiscal sovereignty: The coexistence of fiscal sovereignties is thus possible. The article concludes by outlining which "fiscal features" of the Swiss system could not work in the EU and which could instead potentially work.... view less
Keywords
EU; Switzerland; business cycle policy; sovereignty; federalism; tax system
Classification
European Politics
Economic Policy
Free Keywords
European Union; comparative fiscal federalism; fiscal capacity; fiscal regulation; fiscal sovereignty
Document language
English
Publication Year
2023
Page/Pages
p. 102-111
Journal
Politics and Governance, 11 (2023) 4
Issue topic
Comparative Fiscal Federalism and the Post-Covid EU: Between Debt Rules and Borrowing Power
ISSN
2183-2463
Status
Published Version; peer reviewed