On 1 January Belgium assumed the presidency of the Council of the European Union. In a recent interview with Politico, Prime Minister Alexander De Croo said that the EU will need additional funds and hinted that it could also come from the association’s higher taxes.
De Croo said that Europeans expect the EU to respond to various challenges, because member states are not capable of tackling them alone. In recent years, EU countries have been hit by the coronavirus pandemic, Russia’s large-scale invasion of Ukraine, energy and migration crises.
“This inevitably brings us to the debate: where does the money come from?” say the Prime Minister of Belgium.
The European Commission and Member States are currently discussing an increase in the Community’s multiannual budget for the period 2021-2027. While all member states except Hungary agree on aid to Ukraine of 50 billion euros, many state leaders at the December summit opposed the Commission’s request for an additional 66 billion euros in funding .
Although the heads of government did not reach an agreement in December, the Commission, in collaboration with Member States, decided to reduce the request for additional funds to 21 billion euros.
If the volume of the EU budget over the last seven years amounts to 1,200 billion euros, the only independent source of revenue for the EU itself is the plastic tax introduced in 2021 in all member states of the community. However, it contributes only 6 billion euros per year to the EU budget, which is why the community’s financing depends almost entirely on contributions from Member States and not on the EU’s own resources.
Although Belgium’s liberal prime minister declined to say whether he was referring to imposing taxes at the European level, there are few ways to increase the EU budget other than direct taxes in Brussels.
An alternative could be to increase member states’ contributions to the common budget, but De Croo admitted that this would be difficult for many EU leaders.
The topic of taxes in the EU is very sensitive, because elections to the European Parliament will take place at the beginning of June.
So far, Northern and Eastern European countries have not supported the imposition of EU taxes. However, unanimity is required regarding tax issues, so any changes in this area require the approval of all member states.
“Many frugal countries would pay a lower share of EU taxes because their carbon emissions are lower. But their position is fundamental: they don’t want the EU to be able to impose taxes,” an official told Politico on condition of anonymity .
The European Parliament specifically wants the introduction of a carbon tax in the Community in addition to the taxation of the profits of multinational companies at Community level. According to calculations, such measures would bring the European Commission 36 billion euros per year from 2028.
Although the formal deadline for introducing such a tax is 2027, when the EU is expected to agree on the next seven-year budget, according to the official, the last realistic chance to reach an agreement on the EU’s most important taxes is before of the European Parliament elections in June.
Furthermore, it would be difficult to start talks from July, because then Hungary will take over the presidency of the EU Council from Belgium, whose Prime Minister Viktor Orban has repeatedly discussed the rule of law with the Commission, helping the Ukraine and the EU budget.
Another question is how the EU spends the money. According to De Croo, a review of the size of EU agricultural aid and the Cohesion Fund could be considered, because these two sectors represent the lion’s share of the EU budget.
Estonia will benefit most from the Cohesion Fund, whose funds are distributed only among those countries whose gross domestic product per capita is less than 90% of the EU average.
The EU funding model would need restructuring before the association accepts new members, De Croo said.
“Before we get bigger, we have to get better,” the Belgian prime minister said.
He added that the EU’s democratic legitimacy cannot function without the community’s own funding.
“[EL-il] there must be money that he is responsible for,” De Croo said.
2024-01-03 16:35:00
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