Wednesday

20th Jun 2018

Brussels feels time is right to suggest EU tax

  • Mr Lewandowski: the current EU budget runs from 2007 to 2013 (Photo: ec.europa.eu)

As the economic downturn sees many member states seek ways of cutting back on public spending, the European Commission believes the time is right to put the thorny idea of the EU raising its own taxes back on the table.

EU budget commissioner Janusz Lewandowski told German daily Financial Times Deutschland that the feelings on the idea of an EU tax had changed in national capitals.

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"Many countries want to be unburdened. In this way, the door has been opened to think about revenues that are not claimed by finance ministers," he said.

If the EU raised its own taxes, then member states could pay less to the EU from their national budgets is the thinking in Brussels. Member states currently pay towards the EU budget based on gross national income, as well as VAT and customs duties.

However, these sources only make up about 12 percent of EU revenue. "The national credit transfers in 1988 were only 11 percent, now they account for 76 percent of our revenue," said Mr Lewandowski. "That was not the intention of the founding fathers."

"If the EU had more of its own revenues, then transfers from national budgets could be reduced. I hear from several capitals, including important ones like Berlin, that they would like to reduce their contribution," he added.

He indicated that possible tax sources for Brussels could include an aviation tax and a financial transaction tax. Mr Lewandowski also has his eye on the money raised from the auctioning of CO2 emissions rights, something due to start in 2013.

He is to unveil his ideas in September. But although the commissioner senses a change in attitude among some member states, his plans are set to be highly controversial.

Several member states oppose the idea of an EU tax in principle, believing it to resemble too much a state-like power

However, commission officials are said to be counting on a feeling among EU citizens that banks and other financial institutions should pay for sparking off the global financial crisis, meaning that a financial transaction tax with the proceeds going to the EU might be less unpopular than in the past.

There is hope that an ambitious Danish EU presidency in the first half of 2012 could seal a deal, a senior official recently told EUobserver.

The EU has a seven-year budget. The current cycle runs from 2007 to 2013. Negotiations on the budget are traditionally full of ill-humour and sniping between member states.

This next round is set to be worse than usual, with governments already feeling the pinch and other highly controversial issues, such as reform of the budget-gobbling farm policy, also up for discussion.

Greek bailout exit takes shape

At a meeting next week, eurozone finance ministers and the IMF are expected to agree on new cash, debt relief measures, and a monitoring mechanism to ensure that Greece can live without international aid for the first time since 2010.

Analysis

Beyond US dispute, EU still aiming at China

On the day it outlined its reaction to US tariffs on steel and aluminium, the EU commission also launched a case against China on property rights - an issue on which EU and US are working hand-in-hand.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

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Europe could lose out in North Korean bonanza

South Korean businesses including Hyundai and Samsung are already scoping investment opportunities. Will North Korea become a 'new Vietnam' opportunity - or more like Myanmar, where slow Brussels policy-making meant EU exporters lost out.

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