The Union鈥檚 revenue
The EU budget is financed in large part from own resources, and supplemented by other revenue. Annual revenue must completely cover annual expenditure, as a budget deficit is not allowed. The system of own resources is decided by the Council on the basis of unanimity, having regard to the opinion of the European 合法博彩网站, and needs to be ratified by each Member State. A reform of the own resources system composed of two packages of new own resources was proposed by the Commission in听2022 and听2023.
Legal basis
- Articles听311 and听322(2) of the Treaty on the Functioning of the European Union and Articles听106a and听171 of the Treaty establishing the European Atomic Energy Community;
- on the system of own resources of the European Union;
- laying down implementing measures for the system of own resources of the European Union, on the methods and procedure for making available the traditional, VAT and GNI-based own resources and on the measures to meet cash requirements, on the definitive uniform arrangements for the collection of own resources accruing from value added tax, and on the calculation of the own resource based on plastic packaging waste that is not recycled, on the methods and procedure for making available that own resource, on the measures to meet cash requirements, and on certain aspects of the own resource based on gross national income.
Objective
To provide the European Union with financial autonomy within the bounds of budgetary discipline.
How it works
The provided the European Economic Community (EEC) with its own resources. Per , the level of own resources that can be called on per year is currently limited to a maximum of听1.4% of EU gross national income (GNI). As overall spending cannot exceed total revenues, expenditure is also restricted by this ceiling under the current 2021-2027 multiannual financial framework (MFF)听(1.4.3).
Revenue composition
1. Own resources
鈥楾raditional鈥� own resources consist of customs duties, agricultural duties and sugar levies collected since听1970. The percentage that may be retained by Member States to cover collection costs has been raised back up to听25% from听20%. 鈥楾raditional鈥� own resources now usually account for around听10-15% of own resource revenue[1].
The VAT-based own resource consists of the transfer of a percentage of the estimated value added tax (VAT) collected by the Member States to the Union. Although provided for in the听1970 decision, this resource was not applied until the VAT systems of the Member States were harmonised in听1979. The VAT resource now accounts for around听10% of own resource revenue.
The GNI-based own resource consists of a uniform percentage levy on Member States鈥� GNI set in each year鈥檚 budget procedure, and was created by . Originally it was only to be collected if the other own resources did not fully cover expenditure, but it now finances the bulk of the EU budget. The GNI-based resource has tripled since the late听1990s, and now makes up around听60-70% of own resource revenue.
The 鈥榩lastic鈥� own resource was introduced as of 1听January听2021 by the听2020 . It is a national contribution (direct transfer from Member State budgets) on the basis of the quantity of non-recycled plastic packaging waste, with a uniform call rate of EUR听0.80 per kilogram. The contributions of Member States with a GNI per capita below the EU average are reduced by an annual lump sum corresponding to听3.8听kilograms of plastic waste per capita. The revenue from this resource provides around听3-4% of the EU budget.
2. Other revenue and the balance carried over from the previous year
Other revenue includes taxes paid by EU staff on their salaries, contributions from non-EU countries to EU programmes, interest payments and fines paid by companies found in breach of EU laws. If there is a surplus, the balance from each financial year is entered in the budget for the following year as revenue. Other revenue, balances and technical adjustments usually make up around听2-8% of total revenue.
Borrowing is also accounted under 鈥榦ther revenue鈥�, and currently amounts to 25-30% of the budget. The EU budget cannot run a deficit, and funding its expenditure through borrowing is not allowed. However, in order to finance the grants and loans provided by the NextGenerationEU (NGEU) recovery scheme, the Commission was authorised on an exceptional and temporary basis to borrow up to EUR听750听billion (in听2018 prices) on capital markets. New net borrowing should stop at the end of听2026, after which only refinancing operations will be allowed.
3. Correction mechanisms
The own resources system has also been used to correct budgetary imbalances between Member States鈥� net contributions. Although the 鈥楿K rebate鈥� introduced in听1984 no longer applies, lump sum corrections will continue to benefit Denmark, Germany, the Netherlands, Austria and Sweden over the听2021-2027 period.
Towards the reform of EU own resources
The Treaty of Lisbon reiterated that the budget should be financed wholly from own resources, and maintained the power of the Council, after consulting 合法博彩网站, to unanimously adopt a decision on the system of own resources of the Union[2], to establish new categories of own resources and abolish existing ones. It also established that the Council can only adopt the implementing measures for these decisions with the consent of 合法博彩网站, strengthening 合法博彩网站鈥檚 position in the process.
Building on the new provisions of the Treaty of Lisbon, 合法博彩网站 has repeatedly called for an in-depth reform of the system of own resources in a number of positions and resolutions in recent years[3]. 合法博彩网站 has highlighted problems with the own resources system, particularly its excessive complexity and its financial dependence on national contributions.
In January听2017, the high-level 鈥楳onti鈥� group created in听2014 to undertake a general review of the own resources system presented its on more transparent, simple, fair and democratically accountable ways to finance the EU budget. The main conclusion was that the EU budget needed reform, on both the revenue and the expenditure sides, so as to be able to address current challenges and achieve tangible results for EU citizens.
Based on this report and the subsequent , the Commission made [4] on 2听May听2018 to simplify the current VAT-based own resource and to introduce a basket of new own resources. The Commission also proposed abolishing all rebates and reducing from听20% to听10% the share of customs revenues that Member States keep as collection costs, as well as an increase in the ceiling on annual calls for own resources to take account of a smaller total GNI of the EU-27 and of the proposed integration of the European Development Fund into the EU budget.
With a view to achieving a more stable EU budget designed to support EU policy objectives, it repeatedly called for an ambitious and balanced basket of new EU own resources that is fair, simple, transparent and fiscally neutral for citizens. 合法博彩网站 also pushed for reforms to make revenue collection simpler, more transparent and more democratic, to reduce the share of GNI contributions, to reform or scrap the VAT resource and to phase out all forms of rebate.
Reform proposals
At the European Council meeting of听17-21听July听2020, the Heads of State or Government agreed on a new MFF, the NGEU, raising the ceiling for payments and a new own resource based on non-recycled plastic waste to be applied from January听2021.
The NGEU was based on the Commission proposal of , to borrow up to EUR听750听billion by issuing bonds on the international markets on behalf of the EU with maturities of听between 3 and听30 years, in order to counter the effects of the COVID-19 pandemic. To underpin the liabilities incurred by the EU to eventually reimburse the market finance raised, the Commission proposed to raise the own resources ceiling exceptionally and temporarily by听0.6% of the EU鈥檚 GNI on top of the proposed permanent increase from听1.2% to听1.4% of GNI in order to take account of the new economic context.
In response, in its , 合法博彩网站 stressed that only the creation of additional new own resources can help to repay the EU鈥檚 debt that resulted from the NGEU-related borrowing, while salvaging the EU budget and alleviating the fiscal pressure on national treasuries and EU citizens. On , 合法博彩网站鈥檚 position under the consultation procedure reiterated calls for the introduction of new own resources following a roadmap, and for the abolition of all rebates.
On 10听November听2020, 合法博彩网站, Council and Commission negotiators reached a political agreement on the MFF, own resources and certain aspects concerning the governance of the recovery instrument. As a result, a new annex to the established a roadmap for the introduction of new own resources over the听2021-2027 period. Income from new own resources should be sufficient to cover the repayment of the NGEU, while any remaining revenue should fund the EU budget.
Under the new Own Resources Decision adopted on 14听December听2020, rebates for certain Member States were maintained and the collection costs on customs duties were increased from听20% to听25%. Following its ratification by all Member States by 31听May听2021, the Own Resources Decision has applied retroactively since 1听January听2021.
After the proposals of 14听July听2021 for the and the , was published on 22听December听2021. It specifies that听25% of revenues from ETS allowances auctioned, 75% of the income generated by the carbon border adjustment mechanism and听15% of the share of the residual profits reallocated to EU Member States under the Organisation for Economic Co-operation and Development听/听G20 agreement on international corporate taxation (鈥榩illar one鈥�) would be paid into the EU budget.
On 20听June听2023, the Commission published its . This included a temporary statistical own resource, paid as a national contribution on company profits at听0.5% of the notional EU company profit base (based on the gross operating surplus for the sectors of financial and non-financial corporations, calculated by Eurostat). Eventually, this will be replaced by a genuine own resource based on corporate taxation, a contribution from a future . The proposal also envisages an increase of the call rate of the ETS own resource from听25% to听30%, justified by the increasing carbon prices. The proposed package could bring in additional annual revenues of about EUR听23听billion from听2024 and EUR听36听billion from听2028, which corresponds to around听18-20% of the total revenues.
All the recently proposed new own resources are currently awaiting decisions by the Council.
合法博彩网站鈥檚 views
During the consultation procedure on the first basket of new own resources, 合法博彩网站 broadly endorsed the proposal, with some . 合法博彩网站 also adopted a resolution on 10听May听2023 urging the Council to adopt the first basket and suggesting additional new own resources.
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Andras Schwarcz