Brussels, 13/03/2007 (Agence Europe) - The European Parliament budgets committee has proposed a two-stage reform of the EU own resources system, the “revenue” section of the Community budget. The own initiative report by Alain Lamassoure (EPP-ED, France) on the future of EU own resources was adopted by the Parliamentary committee on 12 March and will be debated by the EP in Brussels on 28 March. It will provide a useful contribution to the debate on the mid-term EU budget review (revenue and expenditure) which will take place in 2008 and 2009, in line with European Council decisions of December 2005 on the financial framework from 2007 till 2013.
The rapporteur, Mr Lamassoure, points out that a system, under which roughly 85% of EU resources do not come from genuine own resources, but are taken directly from national budgets through VAT and a resource based on Gross National Income (GNI), is a denial of the arrangements and the spirit of the Treaty of Rome, because it is a system based on national contributions. He feels that it is these payments that are fuelling the debate on “net contributors”. Mr Lamassoure is convinced that the current system will not afford the EU sufficient funds to carry out all its policies. According to the report, the current system (made up of four different resources and various rebate mechanisms, including the British correction and rebates granted to fund other discounts) is “excessively complex, lacks transparency and is completely incomprehensible” to European citizens. MEPs highlighted that the European Council agreement of December 2005 on the 2007-2013 financial perspective, with its many exemptions regarding revenue and “gifts” made to some member states in the field of expenditure, proved clearly that the current system did not work. Since 1995, the European budget had increased by only 8.2% in real terms and its share of GNI has fallen, while, at the same time, national budgets had increased by an average of 23%. The reform proposed would be in two stages:
Improvement of the current system: during the first reform stage of the “revenue” section of the budget, the “transitional” system would be based on the GNI resource. This implies the removal of the VAT resource and the gradual abolition of the British rebate by 2013. The report also calls for the introduction of compulsory co-financing (by member states at national level) of agricultural spending in the 15 “old EU member states”. A number of principles would underpin this system at this initial stage: - equality between member states, to avoid horse trading and privileges (of the 46 articles deriving from expenditure in the new cohesion column of the conclusions of the European Council in Brussels in December 2005, a total of 20 were additional arrangements giving various member states or regions “Christmas presents”, he said). This first phase, improving the current system of national contributions, could come into effect as soon as the budget review is ratified, likely to be in 2009. This transitional system would last until a genuine own resource was created, around 2014.
Genuine European own resource: the report points out that there is general consensus within the national parliaments of member states that the time is not yet ripe for a new genuinely European tax. The report proposes putting in place a new own resource system based on a share of the taxes already being levied in member states. Under this system, a certain percentage of existing taxes could be paid into the EU budget, forming a genuine own resource, and also creating a direct link between European taxpayers and the EU. The draft report suggests the following tax sources: - VAT; - excise duties on motor fuel for road transport; - excise duties on alcohol and tobacco; - taxes on corporate profits. During debates within the EP, other tax resources were proposed, such as taxes on trading on the stock exchange, on financial transactions (the “Tobin” tax) and on savings. Committee members propose that this system is implemented gradually from 2014, with a “transition period” to guarantee “a smooth phasing-out of the old financing system”.
The report stresses that the new system must not grant the EU the right to levy taxes. Fiscal sovereignty must remain with the member states, which could, however, authorise the EU to benefit directly, for a limited period, from a certain share of a tax, as happens with regional or local authorities in most member states. The new system “must not increase overall public expenditure nor the tax burden for citizens”, says the EP budgets committee. If it directly allocates part of a tax to the EU, “an equivalent reduction would have to be made elsewhere”. A number of principles would, once again, underpin this new own resource, the declared aim being “to revive the letter and the spirit of the founding treaties”: full respect for the fiscal sovereignty of the member states, fiscal neutrality, and no changes to the order of magnitude of the EU budget. (lc)