Tax the Builders, Fund the Bureaucracy: The EU’s Medieval Cure for a Modern Economy

The European Commission’s latest budget proposal – including a new levy on large companies operating across the EU – is being spun as a contribution to “competitiveness” and “strategic autonomy”. But let’s not mince words: this is a massively interventionist throwback masquerading as modern economic policy.

It reveals a deeply perverse mindset – more château central planning than global competitiveness strategy.

Taxing firms for operating across borders in a Union that still doesn’t offer a functioning single market is the policy equivalent of locking your best athletes in the basement, then wondering why they don’t win Olympic gold.

We have fewer globally competitive firms than the US or China because our companies face a fragmented internal market, 27 legal systems, 24 languages, and dozens of regulatory dialects. Meanwhile, firms in the US scale coast-to-coast on day one. Chinese firms scale vertically and horizontally with state direction – and then eat into global market share. And what does Brussels do in response? Tax its own.

Sound familiar? It should. This debate mirrors the EU’s earlier push for a digital services tax – a policy designed to penalise large, cross-border digital firms. But as always with such levies, the intended targets simply passed the cost on. In the end, it was Europe’s citizens – the users of the most innovative, high-value services – who paid the price.

That’s the iron law of taxation: only individuals bear the real burden – whether as customers, workers, or shareholders. Companies may collect the tax, but individuals – we – are the ones who pay it.

The proposed “corporate contribution” for companies earning above €50 million annually is not just economically unsound – it’s structurally telling. It punishes firms for doing exactly what we claim to want: expanding across borders, integrating operations, serving the single market. In other words, acting European.

What we now need is a Coalition of the Willing – governments ready to question the very institutional trajectory of the EU. In my Competitive Harmonisation proposal earlier this year, I argued that a group of member states must break the impasse: not by demanding more subsidies or bespoke sectoral rules, but by advancing a bold agenda of horizontal regulatory harmonisation.

That means harmonising rules that affect all businesses – regardless of sector, business model, or size. Real competition is built on the freedom to operate, not a maze of gold-plated national rules or a drip-feed of green subsidies.

Let’s face it: Europe cannot subsidise its way out of structural fragmentation and stagnation. It cannot tax large companies into being small. And it cannot regulate its way into relevance if the rules themselves are contradictory, duplicative, and impossible to scale. Without a real internal market, talk of sovereignty or competitiveness is just ceremonial.

The new German-led conservative coalition has a historic opportunity – and responsibility – to challenge this course. Now is the time to question not just the budget, but the logic behind it. President von der Leyen and the College of Commissioners speak of global leadership. But Europe cannot lead if it punishes those who try to build across it.

We need new thinking. New coalitions. And above all, a new seriousness about competitiveness – not in name, but in practice.