Commission raises prospect of new taxes to fund EU authorities

THE EUROPEAN Commission has raised the prospect of new EU-wide taxes to fund the work of the European authorities as they seek ways to reform their multibillion-euro budget in the wake of the financial crisis.

The commission said a new phase in the evolution of EU financing could include the introduction of “one or several new” own-resource revenue streams and the simplification of contributions from member states, which are currently calculated according to national income.

Possible own-resource taxes set out by the commission include EU taxation of the financial sector, EU revenues from auctioning under the greenhouse gas Emissions Trading System, an EU charge related to air transport, EU VAT and EU corporate tax.

Such measures were set out by way of a “non-exclusive list of financing means” which “could be possible candidates for own resources to gradually displace national contributions, leaving a lesser burden on national treasuries”.

In a communique intended to kick-start a debate on how the EU raises and spends money, the commission also pointed to radical reform of the Common Agricultural Policy (CAP).

A reform process already under way has led to fears in Dublin that Ireland’s share of the budget could be threatened.

While the document said CAP reform could be pursued with different degrees of intensity, it is widely acknowledged that the commission ultimately wants to shift the focus of EU expenditure towards the promotion of growth-producing industry.

Commission chief José Manuel Barroso made it clear that the CAP was under scrutiny, saying “we need to further shift the policy towards the challenges we face” such as competitiveness, innovation, environmental protection and climate change.

“The budget should above all be designed to help deliver smart, sustainable and inclusive growth. It also means directing it to collective challenges like energy and climate change, justice and home affairs and the external projection of the EU.”

The commission also suggested “the phasing out” of correction mechanisms such as the British budget rebate negotiated in 1984.

“The current system is perceived as opaque and too complex, lacking fairness – notably with regard to corrections – and relying excessively on resources which are perceived as expenditures to be minimised by the member states,” the commission said. “With the exception of customs duties stemming from the customs union, existing resources display no clear link to EU policies.”