A reform of the revenue side of the EU budget is needed and this exercise is expected to be undertaken at the same time as a reform of spending, in order to respond better to today’s new priorities. These were the main conclusions from the high level working group’s report on own resources – which will be presented at an extraordinary meeting of the European Parliament’s budget committee in Brussels on Thursday 12 January.
The group is chaired by the former Italian prime minister Mario Monti and essentially believes that the outlook of the UK leaving the EU offers an opportunity for reviewing the system of EU own resources. Indeed, when Brexit becomes a reality there will be no more British rebate. “The departure of the UK from the EU and the removal of the British rebate offer a unique opportunity to review how we measure the EU’s real costs and benefits”, the 100-page report, obtained by EUROPE, states.
But as regards solutions on the new own resources, the group puts forward several options. Needless to say, the subject is very sensitive in the member state capitals, on an issue which, furthermore, requires unanimity at the Council.
No ideal option. The report confirms the previous observation that there is no single ideal option, but only several options. The group has examined several possible sources of revenue in detail. “A comprehensive and viable reform of the system of own resources could be based on a combination of new resources coming from production, consumption and environmental policies”, the 12 members of the group state. They believe it is more constructive to present a wide range of sources of revenue rather than creating pointless resistance to any specific option. Among the possible new own resources linked to the single market and to tax coordination are a revised own resource on VAT (replacing the current VAT resource), a common consolidated tax base on companies or a tax on financial transactions and other financial activities.
The group also mentions new revenue linked to policies on the Energy Union, environment, climate or transport: a carbon tax (tax on pollution and CO2 emissions), a tax on electricity, a tax on fuel or an indirect tax on goods produced in third countries with high emissions.
Own resources are not the only possible source of revenue for the EU. The category of other revenue has been neglected in past reforms but could become an additional element. Other revenue could flow directly from secondary EU legislation and could involve border control, the single digital market, environmental protection or energy efficiency (like excess emissions premiums for cars).
In addition, the report proposes the possible components of a comprehensive European financial package, applicable both to spending and revenue. When it comes to spending, the group recommends restructuring the multi-annual financial framework according to the notions of public good or value added, and taking account of the nature of the challenges to be addressed. The European Commission will take account of the recommendations in its proposals that are expected for the end of 2017 on the post-2020 multi-annual financial framework. (Original version in French by Lionel Changeur)