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6th Jun 2020

Commission breaks taboo on 'own resources'

  • Lewandowski: 'We need to find a way out of this' (Photo: ec.europa.eu)

The European Commission has proposed a list of potential methods to enable the EU to raise its 'own resources' in future, citing the need to end current wrangling over member state contributions to the Brussels budget.

A separate EU-wide value added tax (VAT) is among the ideas contained in the commission's "budget review" published on Tuesday (19 October), a document which stems from a Franco-British spat in December 2005 over EU payments.

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Other self-funding mechanisms could include a financial sector tax, a share of profits from auctioned greenhouse gas emission allowances, an EU charge related to air transport, an EU energy tax or an EU corporate income tax.

Presenting the review in the European Parliament in Strasbourg, EU budget commissioner Janusz Lewandowski said the EU budget should rely less on member state contributions, as was previously the case.

National contributions, based on gross national income (GNI), represented 10 percent of the EU budget in 1988, but these days amounts to roughly 70 percent as takings from EU customs duties and farm levies have declined.

"The question of EU funding priorities is always overshadowed by debate on 'net contributors' or 'juste retour'," Mr Lewandowski told the MEPs. "That is why we need to find a way out of this."

In a bid to head off member state opposition to the funding proposals, the commission was quick to stress that the new mechanisms would not result in extra revenue for the EU institutions, but would instead relieve pressure on national coffers at a time of economic difficulty.

The formerly taboo subject of a European tax is likely to provoke strong reactions in the coming days, with the UK among wary member states who fear self-funding powers could lead to an overly-independent set of EU institutions.

The list of ideas in Tuesday's document will also kickstart the debate on the shape of the EU's next multi-annual budget, with the current spending period due to end in 2013. This year's annual expenditure will total roughly €130 billion, of which 70 percent goes towards the common agricultural policy (CAP) and poorer regions.

The upcoming talks are expected to be heated, with net contributors such as Germany, the UK and the Netherlands likely to look for EU austerity measures to match spending cuts back home. Poland and other eastern states are set to defend the EU system of payments of which they are net recipients.

France has indicated it will not support a scaling back of the CAP, while London has clearly said that its EU budget rebate is not up for discussion.

While shying away from specific recommendations on which sectors should have their funding cut, the commission's budget review does call for a shifting of money to areas that promote "smart, sustainable and inclusive growth ... such as energy and climate change."

"The common agricultural policy needs to evolve, if only because reference values for direct payments are now a decade old," said a commission statement.

"The EU budget must focus on added-value; in short, it must identify where one euro spent at the European level brings more benefit than at the national level," continued the statement.

Concrete commission proposals on the post-2013 multi-annual budget are expected to be published in July of next year, with unanimous member state approval and European parliamentary support needed before they can become law.

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