Budget Matters!

A supranational democratic organization requires its own legitimacy as well as independence by its member states: they are represented and participate actively in the decisional chain, but cannot keep the decisional process hostage of their own will.

In order to be free, an international organization needs an adequate financial independence, i.e. its own budget. Without it, its decisions aren’t the result of a balance of values and interests at stake, but become mere negotiations among the most influential capitals and, ultimately, the result of a balance of power –  so undermining the added value of supranationality and multilateralism and reducing to zero the role of individuals. Real independence can be guaranteed only by specific statutory provisions and by an adequate budget.

But how a budget may be an independent one?

In 1970 a strong commitment for financial autonomy in the European Economic Community was mirrored by a genuine system of own resources – basically agricultural and import duties, complemented by a small quota of the harmonized value-added tax. National contributions (in a percentage of gross national incomes) were reintroduced in 1988 in order to complement a decrease in the own resource revenue, which became more and more relevant in the following decades as import duties decreased as an effect of evolving international trade rules.

As a consequence, what was supposed to be a transitional solution was reinforced over the years, reducing significantly the financial autonomy of the Union. It’s not surprising, now, that some States are more equal than others and speak with louder voice!

So, genuine own resources are a necessary complement to a democratic system and resources means – first of all-  taxes.

The ancient slogan “no taxation without representation” may so be easily reversed, as “no representation without taxation” because what could elected representatives do with money which is gracefully granted by the richer (if not pleasing them)?

The debate on which taxes could better fit a supranational system is open and not only in the European Union: carbon taxes, financial transactions taxes, e-commerce taxes? What makes some proposals interesting is that they could have useful side effects, such as reducing CO2 emissions, decreasing inequalities, limiting tax avoidance.

Another interesting path of reasoning is considering some resources which are revenues without being taxes. See for instance the possible income coming from the common heritage of mankind (and taxes on related activities), which could be employed for the benefit of humanity.

Some examples of the “common heritage principle” may be found in international law: in the Outer Space Treaty (1967), in the UNESCO World Heritage Convention (1972), in the never ratified Moon Treaty (1979), in the Montego Bay Convention establishing the Seabed International Authority (1982), in the UNESCO Universal Declaration on the Human Genome and Human Rights.

Which better use could be made of the principle of the responsibility of the present generations towards the future ones than designating some mankind’s sources of revenue to finance the functioning of a democratic global system? 

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