The proposed decision of the Council of the EU, to be adopted by the European Commission on Wednesday 2 May in addition to the multiannual financial framework post-2020, will provide for a basket of new own resources, including a tax on a non-recycled plastic packaging waste, aiming to cover 22% of the budget of the European Union in 2027.
According to the draft text, of which EUROPE has had sight, the Commissioner for the CAP budget, Günther Oettinger, is fairly ambitiously tackling the reform of the ‘revenue’ side of the EU budget, an initiative that will certainly please the MEPs. However, the debate is likely to be very tense at the Council, where unanimity will be required to bring any new own resources into being.
Corporate taxation. The Commission’s first suggestion consists of creating a new own resource related to the common consolidated corporate tax base (CCCTB) (see EUROPE 11647).
In the longer term, companies in the digital sector will be taxed “according to the new corporate taxation rules proposed in that package, which will be reflected in the common consolidated corporate tax base”, the proposal reads.
This tax would be designed to generate between €21 and €140 billion over seven years, according to the Commission’s estimates. And by 2027, the CCCTB could supply 18% of the EU budget.
ETS. Secondly, the Commission proposes a new own resource based on income from an emissions quotas trading system, which is the cornerstone of the EU climate policy. A proportion of quota are auctioned by the member states and purchased by businesses to cover their greenhouse gas emissions.
This resource could be worth between €7 and €105 billion to the EU budget over seven years (depending on the price of carbon). By 2027, it could provide 2% of the EU budget.
The final suggestion is to establish the principle that future revenue arising directly from EU policies should be paid into the EU budget.
In the future, the ‘own resources’ basket “could potentially include the proceeds (or parts thereof) of Financial Transaction Tax, should the member states currently negotiating the enhanced cooperation in the area come to an agreement”, the proposal also reads.
Similarly, a share of the new revenue generated by a fairer tax on digital activities could go to the EU budget, “should member states adopt a legislative proposal for a common system of digital services tax”, the Commission explains (see EUROPE 11986, 11983).
The European institution reiterates that the system has not been reformed since 1988 and that the new priorities of the EU and the budgetary effects of Brexit call for particular attention to be paid to the architecture of the own resources system. The Commission considers that the system needs to be reformed to help tackle the EU’s new challenges (climate change and pollution in particular).
Updating existing own resources. The Commission is proposing an update of the existing own resources, cutting their relative share of the EU budget from 82.9% in 2018 to 62% by 2027.
In particular, it suggests: - keeping customs duty as traditional own resource for the EU (but reducing from 20% to 10% the percentage retained by the member states as ‘collection costs’); - maintaining the own resource based on gross national income (GNI); - simplifying the value-added tax-based own resource.
Finally, the Commission proposes scrapping all rebates granted at the moment to the United Kingdom, Germany, Austria, the Netherlands and Sweden. It also suggests increasing, by a percentage still to be determined, the upper limit of own resources (currently 1.20% of GDP of the EU countries).
Eurozone fiscal capacity. At the end of May, with a view to deepening Economic and Monetary Union (EMU), the Commission will propose the creation of a macro-economic stabilisation fund (‘European public investment stabilisation scheme’) to be used by the Eurozone countries to support company reforms and maintain investment in the event of economic downturn.
To feed into this fiscal capacity for the Eurozone, the Commission proposes that the Nineteen make available some of the revenue generated by the monetary operations of the European central bank system. This envelope would be posted to the EU budget as ‘external assigned revenue’.
The proposed decision is available at: https://bit.ly/2I0UWqK. (Original version in French by Lionel Changeur with Mathieu Bion)