The Member States gave a cool reception to the list of potential new own resources submitted to them by the Polish Presidency of the Council of the EU (see EUROPE 13630/13) at a working group meeting on Tuesday 29 April. Many of them continue to believe that there is no point in adopting new own resources (NOR).
The discussion has in fact been at a standstill since a discussion at the Ecofin Council on 8 December 2023, during which the adoption of the package of three own resources (CBAM, ETS2 and company profits) proposed by the Commission, which the European Parliament had just supported a few weeks earlier, was discussed (see EUROPE 13289/1).
Since then, the subject has not appeared on the agenda of any formal ministerial meetings. The Member States are reluctant to do so, and the adoption of any proposal in this area requires unanimity.
However, for several months now, the President of the European Commission, Ursula von der Leyen (see EUROPE 13604/2), and the European Commissioner for the Budget, Piotr Serafin (see EUROPE 13511/18, 13577/20), have been urging Member States to break the deadlock. After all, the Council of the EU committed itself to adopting new own resources in the course of the 2021-2027 Multiannual Financial Framework (MFF), in the December 2020 Interinstitutional Agreement on budgetary discipline. The adoption of NOR was then scheduled for January 2023. However, only the plastics tax has been approved (see EUROPE 13626/20).
The aim was to repay the Next Generation EU loan taken out by the EU as part of the post-Covid-19 recovery plan. The need for greater investment in European security and defence and the initial discussions on the next MFF have put the subject back at the heart of expectations. How can the EU’s growing political priorities be financed within a long-term budget that has been cut by 20% of its annual amount by the repayment of the post-Covid-19 loan?
The tone had already been set at the December 2023 Ecofin Council, where only 12 Member States took part. On that day, Portugal was the only country to support the package. Six countries were firmly opposed. Five were in favour of an own resource based on the Carbon Border Adjustment Mechanism (Bulgaria, France, Ireland, Luxembourg and the Netherlands), and three in favour of the Emissions Trading System (France, Luxembourg and the Netherlands).
Time is running out, say the Parliament and the Commission, whose proposal for the post-2027 MFF is due in July 2025. Ursula von der Leyen has made this a priority, believing that the issue of NORs should be “clarified” (see EUROPE 13604/2). The Commission expects the EU Council to “make rapid progress”.
In the meantime, its “current proposal remains on the table”, a European source told Agence Europe, adding that the Commission “has ensured that it will generate substantial revenue and can be implemented quickly, as all the sectoral legislation has already been adopted”.
The States are blocking it. For over a year, the Member States have been saying that the EU should not be “in a hurry”. In 2023, Sweden declared that “the current system works well”, while the Czech Republic preferred to postpone the introduction of NOR “for the next MFF”, “if necessary”.
To be supported, an own resource must not create an excessive imbalance between Member States’ contributions. They also believe that a “genuine” own resource should not interfere with powers or tax revenues already in force at national level. However, the countries of Central and Eastern Europe are opposed to the introduction of the emissions trading system as an own resource in the EU budget. These countries are more polluting and would contribute more than other Member States.
Opposition to a provisional own resource based on company profits is even stronger. Ireland sees “methodological biases” and is calling for tax harmonisation “on a global scale, within the OECD”.
Using “gross operating surplus as the basis for the resource” means ignoring differences in tax systems, Ireland points out. Luxembourg, for its part, believes that this “purely statistical resource has no link with EU policies”, which is generally the case.
New proposals to break the deadlock. To date, the Commission’s calls have not resulted in a new resources package. However, contacted by Agence Europe, the institution states that it “does not rule out proposing new own resources” and is exploring “sources of funding in order to guarantee sufficient and sustainable financing of our common priorities”.
In Parliament, some of the shadow rapporteurs on own resources are expecting more from co-rapporteurs Sandra Gómez López (S&D, Spanish) and Danuše Nerudová (EPP, Czech). But the latter believes that “the strategy of making a wish list is not the right one and has not worked in the past”, a source told Agence Europe.
Parliament does not want to commit itself without political support at all levels, but does expect the Commission to “go beyond what is on the table”. According to this source, “the majority of players, including the Commissioner [Piotr Serafin], agree that we need to go further - i.e. come up with new proposals”.
“Ideas are circulating”, says the source, citing “an increase in ETIAS, excise duty on tobacco, reform of customs duties (removal of the threshold)” etc.
Danuše Nerudová, like Emmanuel Macron (see EUROPE 13594/18) and 39 MEPs (see EUROPE 13624/11), are defending the introduction of a tax on digital services, in reaction to the “US withdrawal from the OECD agreement”. According to the MEP, the US administration will not necessarily be more conciliatory if the EU “gives up on imposing” this tax.
“Even if Piotr Serafin seems open to discussion, there have been no developments so far”, warned Sandra Gómez López. For its part, the European Parliament’s Committee on Budgets is planning to organise a workshop with experts on own resources in May or June.
Signals are still weak. But the will of the Parliament and the Commission is coming up against a reality: the Member States remain reluctant. The latter did not take kindly to the ideas set out in a non-paper from the Polish Presidency of the Council of the EU (see EUROPE 13630/13) at the working group on own resources on Tuesday 29 April, according to several diplomatic sources from Member States that have historically been very sensitive on the subject.
The ETIAS payment, for example, is “not an own resource, but a fee”, which is in any case “not very significant in terms of revenue”, according to one of these sources. According to another source, the document submitted by the Polish Presidency is merely “a compilation of ideas that have been circulating for 15 years; some of which are outdated, others have no legal basis, others do not reflect current priorities, and still others are taxed, and therefore difficult overall”.
One of them sums up the situation: “Nobody wants to give up their sovereign right to tax, even if it could be beneficial for the EU”. (Original version in French by Florent Servia)