The EU budget post-2020 should stand at 1.3% of gross national income (GNI) and this amount will only be achieved by introducing new own budgetary resources, if the member states refuse to increase their national contributions, Jan Olbrycht (EPP, Poland) and Isabelle Thomas (S&D, France) argue in their draft report preparing the European Parliament’s position on the forthcoming multi-annual financial framework (MFF), which will be debated for the first time at Parliament’s committee on budgets on Wednesday 24 January.
The aim is to reach a position before the European Commission makes its proposals in May.
The two co-rapporteurs call for a sufficiently large Community budget that is flexible and streamlined in its procedures, to allow the EU to act in areas in which it adds the most value and to meet the new challenges that lie ahead of it: the race to innovation, social and territorial cohesion, migration flows, defence and security. The Common Agricultural Policy (CAP) and the cohesion policy, which currently represents 75% of the MFF, should retain their current envelopes after 2020, they argue.
Although they prefer a system of two five-year periods (‘5+5’) with a compulsory mid-term review, for reasons of timetabling they propose that the next programming period be seven years, for the last time.
By changing the nature of aid from grants into secured loans, the financial instruments - such as the European Fund for Strategic Investments (EFSI), the financial arm of the ‘Juncker’ plan - help to increase the impact of the EU budget whilst securing support for projects. However, this technique is only an extra instrument rather than an alternative form of financing, Olbrycht and Thomas stress.
The structure of the next MFF should change little and should be as follows:
- a stronger and more sustainable economy: under this heading, the MEPs call for the budget of the future framework research programme (FP9) to be set at €120 billion, the envelope of the COSME programme for SMEs to be doubled and direct agricultural support to be kept at its current level;
- greater cohesion and solidarity in Europe: the cohesion policy, which would remain at its current level, would be allocated on the basis of regional GDP and other social, environmental and demographic criteria in order to take greater account of new forms of inequalities; the Erasmus+ budget would be tripled; a new fund for asylum, migration and integration policy would be created;
- increased responsibility in the world: the MEPs consider that substantial additional funding is necessary to allow the EU to play its role with respect to its neighbours, through its development policy;
- security, peace and stability for all: this new heading will demonstrate the importance of this policy at European level, particularly to bring a possible European defence union into being;
- effective administration at the service of Europeans: the MEPs consider that the European institutions should not see their staff cut by a further 5%.
As for the special instruments outside the budgetary ceilings, their envelope should be as follows: €2 billion for the flexibility instrument: €1 billion for the emergency aid reserve, €1 billion for the EU Solidarity Fund and the same amount for the Globalisation Adjustment Instrument as under the current MFF.
Arguing that the provisions of the current MFF that aim to make the EU’s budget more flexible are working, the co-rapporteurs call for these to be reinforced after 2020. In particular, funds that have been committed but not used should be made available again, as should the non-mobilised budgetary margins.
Ambition needed to identify new own resources
The EU budget, which absolutely must be balanced between revenue and expenditure, is currently funded as follows: 69% from the GNI-based contribution, 13% from traditional own resources (customs duty, agricultural duty, ‘sugar’ contributions) and 12% from VAT revenue, with the rest coming from taxes paid by EU staff and fines from competition breaches.
Gérard Deprez (ALDE, Belgium) and Janusz Lewandowski (EPP, Poland), co-authors of the draft Parliament report, consider that bringing in new own resources should pursue the following two objectives: substantially reducing national GNI-based contributions and increasing spending in the framework of the post-2020 MFF, whilst covering the loss resulting from the withdrawal of the United Kingdom from the EU. On the grounds of Brexit, they are calling for all rebates and corrections enjoyed by certain member states to be abolished.
Taking inspiration from the 'Monti' report on own resources (see EUROPE 11701), they list areas for work to reform the way own resources are connected the moment or phase in new taxes to feed into the EU budget.
The possible own resources discussed are as follows: - bring in a standard pre-levy (1% to 2%) on value-added tax (VAT) revenue as reformed at EU level; - charge a tax on the revenue from the tax paid by companies subject to the CCCTB tax base; - create a method for the taxation of financial activities, in reference to the work on the taxation of financial transactions, currently on ice.
In the longer term, a so-called ‘equalisation’ tax on the turnover achieved in Europe by digital companies and an adjustment tax on carbon emissions at the EU borders could be options.
The co-rapporteurs also stressed the potential EU resources represented by the future ETIAS system, which will require third-country travellers to pay for authorisation to travel to the EU.
The two draft reports are available at: http://bit.ly/2n4dJrk . (Original version in French by Mathieu Bion)