CMV: The European Union should pay a Euro-Dividend to each of its permanent residents

Sat Jun 30 2018 15:00:00 GMT+0000 (Coordinated Universal Time)


Philippe van Parijs

UC Louvain


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Eurodividend is a modest basic income to every legal resident of the European Union or of the Eurozone. It provides an unconditional floor that can be supplemented at will by other income. Its level can vary from country to country to track the cost of living. It is to be financed by the Value Added Tax. To fund a eurodividend averaging 200 euros per month for all EU residents, one needs to tax the EU’s harmonized VAT base at a rate of about 20%.
Here is why we need it:

1. In the absence of sufficient homogeneity and easy migration, the economic sustainability of the common currency requires a reliable yet simple transfer scheme that will help buffer asymmetric shocks and long-term divergences. A centrally funded eurodividend is such a scheme. 

2. The right of intra-European free movement is a neat achievement, but it will be politically sustainable only if sufficiently few make use of it. To limit the negative side effects of migration for both the communities of destination and the communities of origin, permanent transfers to people in poorer regions are needed. A eurodividend achieves this.

3. The free movement of capital, human capital, goods and services across the borders of member states erodes the redistributive capacity of each of these states. Our welfare states will not survive the pressure of competitiveness unless the united European market introduces something like a eurodividend.

4. If the European Union is regain legitimacy among most of its citizens, it must be perceived as doing something very tangible for the stay-at-homes, not only for the movers. For this tohappen, it will help to introduce something totally unprecedented: a universal eurodividend.    

Background Information

  • While a Euro-Dividend is not yet debated in Brussels, it is related to more general ideas of a basic income within nation states, which have in turn received greater attention in the recent past:

    • In 2016 the European Parliament's Research Service released a briefing document on the issue of basic income

    • In 2017, the Committee on Social Affairs, Health and Sustainable Development of the Council of Europe published a report on the idea of a basic income and its potential upsides

    • In January 2018 the Council of Europe Assembly voted in favor of a resolution concerning basic income

  • In addition to EU-level deliberations, the idea of a basic income has also been discussed on a national, member-state-level and in local contexts, f.e. in Finland, France and the Netherlands

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