Brussels, 29/03/2007 (Agence Europe) - On Thursday 29 March, the European Parliament voted for a two-stage reform of the “revenue” section of the budget, the aim being progressively to create, from 2014, a real own resource for the EU. The own initiative report from Alain Lamassoure (EPP-ED, France), which was adopted by a large majority at the EP plenary session (458 votes to 117, with 61 abstentions) is a useful contribution to the work of the European Commission in preparing proposals, expected in 2008, on the mid-term review of the overall EU budget.
“The reason why the 2007 budget is not even 1% of the EU's gross national income is the deregulation of the resources system. Over time, the principle of own resources, that is, tax resources paid directly to the EU, has given way to funding the EU budget through contributions from national budgets,” said Mr Lamassoure, who believes these contributions “exacerbate national budgetary selfishness, particularly since … several member states have acquired special regimes. Finally, this system … has become anti-democratic and completely incomprehensible to citizens”. Since the main national budgets are, themselves, in deficit, “the EU cannot have the funding it needs for all the European policies. Therefore, important and ambitious Community initiatives, such as Galileo or the trans-European networks, do not receive the funding they require,” he regretted. He also called on the EU to give itself “a new system of own resources, in line with the letter and spirit of the founding treaties”.
In its resolution, the EP criticises gaps in the current system under which around 70% of the EU's resources do not come from own resources, but directly from national budgets through a resource based on the gross national income (GNI), and 15% come from a resource such as that from VAT. He accepts, however, that, while the GNI resource is less visible for citizens, it is fairer, insofar as it links contributions and the level of general prosperity. The EP points out that it is these “dues” which exacerbate the debate on “net contributors”, which fails to take account of all the EU has brought in terms of peace, freedom, prosperity and security. The EP is firm in its belief that the present own resources system (which depends on contributions from member states) is unjust towards citizens, anti-democratic and does not help make commitment towards European integration more visible. It believes that this system does not bring the EU sufficient funding for all its policies and denounces the possibility of some member states not officially funding policies in which they have an interest. It fears that this practice may become the beginning of the destruction of values that have helped the EU succeed over the last 50 years. MEPs stress that the current system (with four different resources and various rebate mechanisms, including the British rebate) is “excessively complex, lacks transparency and is totally incomprehensible to European citizens”. The EP notes that the need for unanimity for decisions on own resources and financial frameworks means that the outcome of negotiations depends on the good will and financial possibilities of the least willing member state, rich or poor. The EP, therefore, is not surprised that the outcome of the exercise is often disappointing.
The Parliament is very critical of the European Council agreement (15-16 December 2005) on the new financial framework 2007-2013. It feels that the final financial agreement, with its many derogations on receipts and gifts granted to some member states, as compensation in the area of spending, is the most flagrant proof of the absolute failure of the current system. It feels it is unacceptable that all member states agreed on important Community actions (Galileo, TEN) and set out ambitious tasks (Gothenburg, Lisbon and Millennium objectives), but that none of them now wants to fund them.
The EP proposes a two-stage reform: stage one would see the method of calculating national contributions considerably simplified, basing it solely on the GNI resource, from which something of the order of 1%, according to Mr Lamassoure, would be asked of each member state. This would mean that over time all the special regimes would be removed, including the British rebate. Such a reform would only be possible politically if it were accompanied by a review of expenditure, as is planned in the inter-institutional agreement. Then, in the second stage, from 2014, new own resources would be introduced gradually to replace national contributions. Contacts between the rapporteur and national parliaments have made it clear that the time is not yet ripe for the introduction of a new European tax. However, several of the existing national taxes could be, at least partially, directly allocated to the European budget, without challenging the tax sovereignty of member states. The EP has drawn up a list of such options, without, at this point, going for VAT, a tax on corporate profits or various taxes on “dirty” energy. This issue will be the subject of a second EP report, after two further meetings with national parliaments in June and November of this year. (lc)