Comment: Public Finance in Europe

2 Colum. J. Eur. L. 557 (1996)

Stefan Kadelbach. Assistant (Privatdozent), Johann Wolfgang Goethe-Universität, Frankfurt; LL.M., University of Virginia; Dr. iur. Frankfurt.

The following remarks will deal with the concept of public finance in the European Community.1 It is particularly tempting to compare, in this regard, the history and development of the United States and the European Union. However, because the financing mechanisms of the EU are far less sophisticated than those of the United States, comparison should (at present) restrict itself to structural considerations rather than delving into details. Elaborating on remarks made by Lerke Osterloh, while also relating to issues raised by Richard Briffault, the key question seems to me to be: are the means of public finance in the Community truly characteristic of a federal system?

In American constitutional law, the parallel history of cases involving the Commerce Clause or the Taxing and Spending Clause is illustrative of the development of the federal system as a whole. By this measure, the development of the European federal system is in its infancy: there have been few constitutional disputes in the history of the Community which have dealt with the distribution of taxing powers. Nevertheless, some elements of the Community’s constitutional structure, when viewed in light of the European political process as it actually operates, might be seen as forming the core of a federal public finance system.


Which sort of public finance provisions in a constitution might one say are characteristic of a federal system? The answer to this question is not as easy as it might appear. The constitutions of federal states such as Germany, Switzerland, Austria and the United States, differ widely on this issue. What they have in common is obviously not, or at least not primarily, some predefined idea of how to finance a federation. Rather, these systems are perhaps understood from the standpoint of the constitutional challenges which arise as the federal state develops. The common challenges, and the way such challenges are faced, point to structures not present in a central or unitary state.