Tuesday

3rd May 2016

Member states continue budget bickering

  • EU ministers failed to reach a consensus on the Cypriot EU presidency's revised EU budget proposals. (Photo: Images_of_Money)

EU ministers on Monday (24 September) did not reach an agreement on the Cypriot EU presidency’s revised budget headings in the next seven-year, EU €1,033 billion budget pact.

The EU presidency had updated a so-called “negotiating box” which outlines the main elements and options for the multi-annual financial framework (MFF) negotiations.

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“Not all elements of our negotiating box were accepted by most or all member states, but all member states accepted the ‘negotiating box’ as a basis for further work", said Andreas Mavroyiannis, Deputy Minister for European Affairs of Cyprus, who chaired the meeting.

Mavroyiannis says spending cuts will be necessary in all MFF headings, which cover anything from job creation to farming subsidies. The EU presidency has yet to put any figures on the cuts on each but argues overall expenditure ceiling for 2014-2020 will have to be “have to be adjusted downwards”.

The UK wants €100 billion slashed from the budget. Britain's Europe Minister David Liddington told the BBC that the commission "should get into the habit of spending better, not always looking to spend more".

But other member states opposed the presidency’s revised plans to slash the budget, “arguing that the MFF was the major investment tool for promoting growth and creating jobs.”

Some also opposed any proposed cuts in the EU’s common agricultural policy (CAP) which eats up €55 billion of the EU’s budget every year. The delegations had argued against any reduction to the EU average of direct aid per hectare.

CAP is set to cost the EU €380 billion over 2014 to 2020 with each EU citizen paying around €105 a year for the scheme, of which €80 goes directly to farmers.

The commission also presented its plans to introduce its own VAT-based revenue stream. The EU budget is currently financed through customs duties, a uniform rate of 0.30% levied on the harmonised VAT base of each member state, and percentage levied on the GNI of each.

But the commission proposal would entitle it to tax businesses and individuals as well. They also discussed a proposal to draw revenue based on a financial transaction tax. Some member states rejected both ideas.

EU ministers will continue negotiations on 16 October and 20 November, with EU leaders to debate the issue on 22-23 November at a special summit. Cyprus is hoping for an overall deal by the end of the year.

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