EU needs new budget for security in Trump era, says Mario Monti

Former Italian prime minister says bloc will need direct share of national tax revenues

Mario Monti: says Brexit offers a chance to be more ambitious on budget reform

Mario Monti: says Brexit offers a chance to be more ambitious on budget reform

 

The migration and security challenges faced by the European Union need to be addressed with a different funding system that would give the EU a direct share of national tax revenues, former Italian prime minister Mario Monti has said.

Monti, who was a European commissioner between 1994 and 2004, chairs an EU advisory group on reforming the common budget that will deliver its final report to the commission this week.

In an interview with Reuters, Mr Monti said a different budget was needed because the EU was acquiring new tasks to deal with the migration and security emergencies.

He said change would not be easy to achieve but may be hastened by the prospect of reduced security support from EU’s main ally, the United States. President-elect Donald Trump has hinted at the possibility that Washington may reduce its involvement in EU defence.

“Trump is an unexpected external variable which will accelerate certain reflections, especially on security issues,” Mr Monti said.

Last week German chancellor Angela Merkel called on European countries to increase security co-operation and spending because there was no “guarantee of perpetuity” in relations with the US.

EU policies

Mr Monti’s report suggests the EU should be funded mostly with direct revenues, which now account for about 10 per cent of its budget, rather than with indirect transfers from national governments that cause regular wrangling among capitals.

Money could come from a share of national taxes and duties on electricity, motor fuel, financial transactions or “other revenue stemming from EU policies”, the report says.

Monti said the reform would “not increase the size of the budget nor the tax pressure on EU citizens and companies”, because more revenues from taxes would be offset by lower national transfers.

The current EU budget, totalling around €1 trillion, runs from 2014 until 2020. It is likely to be reduced after the United Kingdom, one of its main funders, leaves the European Union.

Mr Monti said Brexit offered a chance to be more ambitious on budget reform because it would rid the bloc of Britain’s traditional reluctance to address the topic and would eliminate the “intractable problem” of the British rebate, under which London ends up paying less into the EU budget.

However, he acknowledged that other countries would oppose reforms. Any change on tax and funding issues require the backing of all EU member states. The EU executive commission is expected to start talks this year on a reformed EU budget for the period after 2020.