To The Right Honorable European Council
President Herman Van Rompuy.
From: Athinarayanan Sanjeevraja
Date: November 30, 2011
RE: EU Austerity Budget 2012
Suggestion:
Balance between the fiscal discipline and growth.
Good
Morning Mr. President. I read Financial Times, London last week that European Council
had sought higher commitments from its member, agrees austerity budget for
2012. The council and the European Parliament agreed on an overall amount of €
147.232 billion, leaving a margin of € 1.23 billion below the MFF ceiling. It
is a good strategy to attack in the midst of a serious financial crisis in Europe . Europe ’s economy
remains very fragile. Many member states are grappling with the consequences of
unsustainable public deficits and very high debt levels. So all member states
are largely looking at fiscal consolidation and plan for growth. EU budget
needs to have some fiscal discipline in it. The EU Budget 2012 as proposed neat
balance between austerity and growth. I am sure the European Parliament has
looked at the process from its perspectives to see and making sure that the
budget is prioritized to areas that will deliver on what Europe
wants.
Let
me layout my impeccable analysis of EU Budget 2012. Number one is spending
control. Spending control is vital before the debt levels. High debt would
severely damage the growth. So the fiscal consolidation at a modest level is
essential. EU budget 2012 will likely to be a far more effective on the
government spending than the tax side of the budget. I knew that government
spending should be left to the national governments because every national
economy within the EU is slightly different and they all have different ways of
addressing their economic problems but I believe that EU can be part of the
solution in how its budget is spent and it can help on areas such as research,
agriculture, infrastructure, climate change, education etc.
Number
two is The European Council proposes 7th Research and Development Framework
Programme, which was reinforced by € 92 million, the competitiveness and
Innovation Frame Work Programme (€ 15 millon), Life Long Learning Programme €
52 million and Erasmus Mundus € 1.9 million. The Council cuts in education
especially to reduce the LLP as well as research initiative people. I think it
is quite disappointing our own commitment for Europe 2020 growth agenda. I
think that the Council wants to see across the board savings. It is
particularly important for this year and next year. The Council must ensure
that cutting budget should not drag on track.
Number
three is The Council proposes cohesion for growth and employment at € 52.8
billion, leaving a margin of EUR 8.4 million and payments at 43.8 billion. I
understand that Structural and Cohesion funds are important, potentially for
new member states and it is bigger part of the EU budget. One of the problems
that we have seen with Structural Cohesion fund is that some of the new member
states have not spent elements of the funds that they have been given in last
year. EU is to help counties within the EU that are relatively less developed
to get the right infrastructure to stimulate growth of the new member states.
From my perspective, we will need to look carefully at how we can improve the
effectiveness of Structural and Cohesion funds which help us to regenerate and
develop the economies that we want to see developed particularly the new member
states.
Number
four is The Council proposes for preservation and management of natural
resources at € 60.00 billion, leaving a margin of €834 million and payments at
€ 57.00 billion. The Conciliation Committee agreed on a joint statement on
preventing measures for future crisis in the fruit and vegetable sector. I knew
that EU has done a good job in agriculture sector. I agreed that this is a key
area. There is lot of problems about food supply. Is there any possibility of
move some of the money currently in the CAP into agricultural research which
would be much more meaningful and it leads to a modern form of agriculture
producing better goods and more jobs?
Number
five is The Council proposes for Administration at € 8.3 billion, leaving a
margin of €474 million. Administration budget is effectively on salaries,
allowances and pension. I think that there is big opportunity to get savings
over the coming years and make sure pensions are frankly more affordable for
the EU in the future. European Council & Parliament should look at how we
can make pay, pension and allowances at the EU level affordable and better
value.
Number
six is tax reform. I believe that tax is a national prerogative. The idea with
corporate tax is to create an environment where it makes sense for European
companies to reinvest their profits in the Europe in new plant, new equipments
by creating new jobs and ensure that corporate investment should be a long term
one which generate increased capital over a period of time. So that it creates
sustained growth. In addition, lowering the tax rates on the richest tax payers
and reduction of top marginal tax rate will increase tax revenue. Incentives
for research and innovation increase business competitiveness. Investment
deduction of SME’s will add value for European companies. GDP growth may accelerate when the relative burden
of taxation in terms of actual revenues rather than headline rates and shifted
towards private individuals and away from corporation.
And
finally encouraging private business
investment and ensure that the cost of doing the business and regulation in
Europe should be low so that it will encourage private investments. High costs
and more regulations are discouraging private investments.
Let
me conclude it president, I think we can really start to see some savings from
this austerity budget 2012 and we want to make sure that the budget 2012 as
proposed finds a neat balance between fiscal discipline and growth. I am sure the European Council should
recognize that financial discipline is critical for the next financial
perspective.
Thank
you very much for letting me states my opinion.
I
am Athinarayanan Sanjeevraja with great respect of you.
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