By Francesco Guarascio
BRUSSELS (Reuters) – The European Parliament is threatening to withhold approval of the next long-term EU budget unless EU governments allocate new sources of revenue to it, according to a draft parliamentary resolution.
The trillion-dollar budget, called the Multi-annual Financial Framework (MFF), finances policies to equalise living standards across the bloc as well as the EU’s agriculture policy, investment in research, development and education.
It also funds measures to assist a transition to sustainable energy production and consumption as well as the projection of the bloc’s soft power around the globe through development and aid programmes.
“Parliament will not give its consent to the MFF without an agreement on the reform of the EU’s own resources system,” read the draft resolution, to be voted on on Friday.
The EU’s own resources include customs duties and sugar levies, a cut of national value added tax, fines imposed by the EU, and national contributions of around 1% of gross national income, the exact size of which is fiercely negotiated every seven years among all EU governments.
“(Parliament) calls on EU leaders and the Commission to take bold decisions regarding the reform of the EU own resources system, including the introduction of a basket of new own resources,” the resolution said.
The list of possible new revenues, effectively an EU tax, could include a common consolidated corporate tax base, taxation of digital services, a financial transaction tax, income from the emissions trading scheme, a levy on plastics and a levy on products imported to the EU that were produced with lower CO2 emissions standards than in the EU, the resolutions said.
Parliament’s approval is necessary for the MFF, which is to start in 2021 and is equivalent to around 1% of EU output, or 140 billion euros ($150 billion) a year.
Negotiations over the exact size of national contributions, made even more difficult by the departure of Britain, a large net contributor to the budget, broke down in February.
The Commission is to present a new proposal on the size of the budget this month, taking into account the recession being triggered by the COVID-19 pandemic and the money — a Recovery Fund — that will be needed on top of the usual budget to restart the economy afterwards.
EU lawmakers were due to debate the issue with the chairman of EU leaders, Charles Michel, and European Commission President Ursula von der Leyen on Wednesday.
The draft said the parliament supported the idea that the Commission should borrow money for the Recovery Fund on the market using its triple-A credit rating, backed by government guarantees.
It should then disburse the money from the fund, mostly in the form of grants but also long-term loans, the parliament’s draft said.
It added that the grants — which would originally come from Commission borrowing — would eventually be repaid via the new, dedicated revenue streams assigned to the EU, once they were agreed.
(Writing by Jan Strupczewski; Editing by Kevin Liffey)
