The European Commission proposed, on Tuesday 20 June, the creation of a new statistical own resource based on company profits for the EU budget.
It also completed the first package of new own resources to facilitate their adoption by the EU Member States.
The EU Council has not yet negotiated the first package dating from December 2021 and providing for the introduction of three new revenues for the EU budget (based on revenues from the Emissions Trading System (ETS), resources generated by the Carbon Border Adjustment Mechanism and a share of the residual profits of multinationals, which will be reallocated to EU Member States under the OECD/G20 agreement).
The proposed new own resources should help to repay the funds raised by the EU to finance the Next Generation EU’s subsidy element.
With regard to the first revenue, based on income from the Emissions Trading System (ETS), the Commission is proposing to apply a higher call rate to income generated by the ETS. In all cases, 30% of the revenue generated by the EU’s ETS will go to the EU budget. With such a call rate, revenues for Member States and the EU budget will still be higher than forecast in 2021 (when the proposal to amend the ETS was presented).
The proposal remains largely the same as regards the revenue generated by the Carbon Border Adjustment Mechanism. A simplified control system is planned, and 75% of the mechanism’s revenue will be allocated to the EU budget.
In addition, the Commission is maintaining the new own resource based on the share of residual profits of multinationals that will be reallocated to EU Member States under the recent OECD/G20 agreement.
The final own resource consists of a temporary statistical based own resource on company profits, which will be levied until the introduction of an own resource based on a forthcoming initiative to simplify corporate tax rules and tax compliance: Business in Europe: Framework for Income Taxation (BEFIT). This temporary own resource comes with a 0.5% call rate to the gross operating surplus statistics recorded for the sector of financial and non-financial corporations of each Member States under the European system of accounts (ESA). This contribution is in no way a tax on companies and will not increase their compliance costs.
Revenue generated. Based on a carbon price assumption of €80 per tonne, the ETS own resource will generate about €19 billion (2018 prices) per year at cruising speed, when the revenues from the new ETS enter into the EU budget. The CBAM own resource will generate €1.5 billion (2018 prices) a year from 2028. The statistical own resource based on company profits would generate revenue of €16 billion (2018 prices) a year from 2024. Under current assumptions, this package is expected to deliver collectively on average €36 billion (2018 prices) per year as of 2028.
“We are proposing the second own resources package as defined in the 2020 Interinstitutional Agreement. The proposal will consist of an own resource based on company profit statistics (no tax on companies!). This is a national contribution based on national accounts statistics”, explained the Commissioner for Budget, Johannes Hahn.
“We return to the subject of own resources. It is important to put our budget on a stable funding trajectory”, said the President of the European Commission, Ursula von der Leyen.
Link to the proposal: https://aeur.eu/f/7lq (Original version in French by Lionel Changeur)