EU plans self-funding despite member state fears

"We will use our right of initiative to put forward formal proposals as to own resources before the end of next June," Mr Barroso told MEPs in the Strasbourg plenary chamber. "The proposals ... will make large endeavours to achieving a consensus in the future. We're open to any ideas," he added.

The Portuguese politician also said the commission will come forward by 1 December with a fresh draft for next year's annual budget after recent talks broke down, taking into account parliament's demands for greater flexibility in budget spending categories, and bearing in mind changes under the Lisbon Treaty.

It will include all aspects already agreed between member states and parliament, he said, including the demand by national capitals to limit 2011 spending increases to 2.91 percent of this year's budget.

"These are the clear commitments undertaken to you," Mr Barroso told the chamber. "We are also ready to repeat them in the form of a declaration appended to an agreement between the council and the parliament, if that were to contribute to getting an agreement."

The announcement to come forward with concrete plans for EU self-funding, hinted at in a recent EU budget review carried out by the commission, is likely to inflame certain member states who worry that such mechanisms would give EU institutions too much independence.

"I am against the introduction of an EU tax," German Chancellor Angela Merkel said earlier this month. "I do not think that redesigning the way the EU get its revenue is a top priority," Mr Van Rompuy said a week later.

Reacting to Mr Barroso's announcement, non-attached UK MEP Diane Dodds called on British Prime Minister David Cameron to clearly state that proposals for an EU tax would trigger a referendum in the country.

Mr Cameron has led the member state push to limit EU budget increases, and is among those most reluctant to grant MEPs a greater say in discussions over the future multi-annual budget (post 2013), something parliament says it is entitled to under the Lisbon Treaty and is linking to its approval of the 2011 annual budget.

The two sides will formally meet with the commission on 6 December to see if agreement on the new commission proposals can be reached. Failure to do so would see this year's budget rolled into 2011 on a month-bye-month basis.

Belgian budget minister Melchior Wathelet warned against failure.

"There would also be specific consequences for European citizens," he said. No agreement would mean the "external action service could run into problems. Financial supervisory bodies could have problems, as would cohesion policy [which funds poorer regions]."

He indicated that while a deal on greater budgetary flexibility would be difficult but possible, member states were not prepared to go further on the issue of parliament's other key demands.

"There is the issue of political declarations [on own resources and the multi-annual budget]," he said. "Here I must say that council can not go any further than what it stated in [earlier] conciliation meetings."