Hannah Bettsworth // 14 May 2019

Ahead of the European elections, the European Commission has taken the opportunity to open a debate around EU decision-making. Its specific proposals include a gradual shift from unanimity to qualified majority voting (QMV) and co-decision on EU taxation policy. This would also be the case for certain social policy elements: non-discrimination, and the adoption of non-binding recommendations on social security and social protection of workers.

Both proposals involve the Lisbon Treaty’s passerelle clauses. A passerelle clause allows a move (without treaty reform) from unanimity to QMV. Under QMV, decisions must be taken by 55% of Member States representing 65% of the EU population, and the blocking minority must be at least 4 members so that larger states cannot block policies alone. It also allows for moving to co-decision with the European Parliament in particular policy areas.

Besides the common concern that taxation policy is a core national competence, the real issue is not just the existence of such powers, but what they would actually be used for in practice. Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, has expressed aversion towards planning and tax competition, and, although he claimed that the Commission had no interest in harmonising tax rates, Frans Timmermans (the Party of European Socialists’ candidate for Commission President) used the recent Maastricht Debate to call for a minimum 18% corporate tax across the EU. The Commission’s motivation partially stems from frustration about the failure of its European digital tax proposals.  Tax competition can be important for smaller Member States in attracting consumption and investment. Converging towards Franco-German attitudes to tax policy could damage their competitiveness. For example, Ireland is one of the main opponents of such a proposal, as its business environment has been particularly attractive to large technology companies.

Moscovici used police and judicial cooperation as an example of successful QMV transition. The history of EU Justice and Home Affairs (JHA) policy is, indeed, one of successful European integration. However, it is not replicable on taxation policy for one key reason. JHA policy started as intergovernmental cooperation and was later adopted into the EU system. The intergovernmental TREVI group first developed European police cooperation in 1976. It was not opened up to co-decision until the Treaty of Lisbon. Schengen was developed in a similar manner. Some European Community members agreed independently to lift border controls with each other. It would not have been possible to get this agreement in Community structures. Over time, others changed their mind and joined. It was integrated into the EU treaties in 1997. Attempting to do similar on tax cooperation would be an obvious detriment to the Single Market.

Using the passerelle on tax would only be possible once Member States feel comfortable with losing Council votes. The potential competitiveness risks make this an unlikely solution to current public discontent. More than anything else, it’s a suggestion for far-off reform in the long term.

Social policy passerelle proposals suffer from the same issues, but to a somewhat lesser extent. The CDU/CSU’s concerns about the policy are no longer entirely relevant. They opposed QMV on four particular areas of social policy, only one of which features in the Commission proposal – social security and social protection of workers.

On non-discrimination, gender and race equality are currently subject to QMV at EU level. Extending such protections to combatting discrimination based on religion and belief, disability, age and sexual orientation, as in the Commission proposal, would help safeguard the rights of individuals with those characteristics. The EU is well-placed to add value as an external actor which can challenge discriminatory national policies in order to provide another form of recourse. Preventing a sole state from blocking progress on anti-discrimination law is consistent with that mission, and consistent with liberal values of protecting the individual from the whims of their government.

In the social security and social protection field, the CDU/CSU’s criticism remains valid. Before we even consider enlargement members, Esping-Andersen identified three different rough patterns among traditional European welfare states. These ‘clusters’ have different conceptions of the relationship between the state, the market, and the individual. If Member States brought their national welfare preferences to the Council under QMV, the less common regimes would lose out to the most common. In theory this would be the ‘corporatist’ regime, which is less concerned with efficient markets and incentivises ‘traditional’ family models. Resulting Recommendations could clash with liberal (e.g. British) and social democratic (e.g. Scandinavian) national regimes.

In practice, the CDU/CSU note that such Recommendations would have no legal force. QMV in social security, then, would have one of two effects. The first would be an ill-fitting single European typology of welfare. The clusters mentioned above are not pure types, and real-world welfare states often borrow elements of other clusters. Experimentation with best practice from other systems could be an unintended victim of welfare convergence. The second, and more likely, would involve Member States ignoring unsuitable Recommendations and disillusionment among voters who wanted a coherent social Europe.

Overall, the prospect of QMV is not inherently threatening. It’s what would happen next that matters. On social policy, the proposals would at best improve equalities protection for more groups who face discrimination. At worst, the seeds of social Europe would be sown on a misguided attempt at a one-size-fits-all welfare regime. In practice, that will not provide fertile ground and so risks disappointing voters. Tax policy is a more serious matter. That reform has the potential to damage EU competitiveness if free market voices are consistently a minority, as well as worsening current internal divisions.