The European Parliament is continuing its discussions on own resources for the European Union’s budget, while waiting to see what new resources will be included in the European Commission’s proposal for the post-2027 Multiannual Financial Framework expected on 16 July (see EUROPE 13641/8). The European Parliament’ Committee on Budgets discussed this issue with three experts and the European Commission on Wednesday 4 June.
The day before, on Tuesday 3 June, at a meeting with Parliament and the EU Council, the European Commissioner for the Budget, Piotr Serafin, had hinted that the Commission did not yet know whether the proposals for new own resources would be a “complete overhaul of what has been on the table” since 2003 or whether they would “supplement” what is already proposed, according to the European Parliament’s co-rapporteur, Danuše Nerudová (EPP, Czech).
The reasons for the blockage. Responding to the theme of the workshop - ‘Unlocking the Own Resources Debate’ - the Bruegel Institute economist Zsolt Darvas explained the deadlock in three points: 1) from the point of view of the Member States, the proposals for own resources represent a potential reduction in national budgets; 2) with the proposals, “there is bound to be a group of countries that will pay more, and will therefore try to block them”; 3) new own resources may be perceived as generating “ more complexity and administrative burden” for the Member States.
The economist also pointed out that own resources do not necessarily bring additional revenue to the EU budget, as they “replace resources based on GNI (gross national income)”.
The European Parliament’s co-rapporteur, Sandra Gómez López (S&D, Spanish), took the view that own resources do not constitute “opportunity costs”, insofar as, without the EU, the resources generated by the ‘CBAM’ and ‘ETS2' mechanisms “would not exist”. In her view, one also needs to “take into account the synergies and economies of scale” that they allow as “joint expenditure”.
The Head of Unit at the European Commission, Irena Peresa shared the MEP’s analysis.
New ideas. Two ideas shared by the experts were of particular interest to MEPs and the Commission. The first, Zsolt Darvas, from the Bruegel Institute, called it a “defence spending shortfall levy”. The second idea, supported by Rebecca Christie, his colleague at the Bruegel Institute, is to generalise the use of debt, based on the US model.
Considering that peace and security are major European public goods, Bruegel came up with the idea of a tax based on a benchmark: Member States that spend less on defence than a set threshold (2% of their GDP, for example) would then have to “contribute proportionately to the EU budget”. Zsolt Darvas explained that by 2024, Latvia had spent 3% of its national GDP on defence, while Ireland had limited itself to spending 0.3% of its GDP.
This proposal “interests me a lot, so I’ll have a lot of questions for you, but I'm going to wait and see what the data is and how things develop”, declared Irena Peresa. Rasmus Andresen (Greens/EFA, German, for his part, proposed instead to transform it into a “tax on the exceptional profits of large defence companies”, an idea that “would be more defensible”.
If you are a sovereign entity, “like the European Union, the most logical way to make up the shortfall is by selling bonds on the capital markets”, defended Rebecca Christie. Debt, as a public good, increases the EU’s competitiveness. A debt stock, for a country or for an entity such as the EU, is perceived as a series of “safe assets”, explained the researcher, pointing out that “the outstanding marketable debt of the US Treasury is around $29 trillion” while that of the EU is “€1.1 trillion”.
For her, the European Union, which does not have sufficient liquidity, should rely on its ‘triple A’ rating and its status as an issuer of safe assets. The Next Generation EU loan is, in this sense, a precedent on which the EU should build, she explained. For the European Commission, Irena Peresa agreed that the EU did indeed have “a certain amount of know-how”. She saw borrowing at European level as “a real added value to support new political objectives”.
Furthermore, Zsolt Darvas said that all the money from customs duties should go into the EU budget, whereas currently 25% of the revenue is paid back to the Member States. The Bruegel Institute also maintains that the Member States’ contribution to the EU budget, via their GNI, should increase by 0.8%. The think tank intends to set out its proposals in detail in a document to be published in three weeks’ time. (Original version in French by Florent Servia)