The Socialists and Democrats in the European Parliament have strongly criticised the European Commission for postponing its proposal for own resources for the EU budget, from spring of this year to late autumn. According to the Group, this is in breach of the inter-institutional agreement between the Parliament and the Commission and sends a very negative message to our international partners and other players. The criticisms were made during an exchange of views with the EU Commissioner for Budget and Administration, Johannes Hahn, in the committee on budget of the European Parliament.
In a deal on the EU’s 2021-2027 budget as well as the €750 billion Covid-19 recovery instrument on 10 November 2020, the Parliament, Council and Commission had reached agreement on a binding timeline for the introduction of new EU revenue sources, including levies on unrecycled plastic waste, the tech giants and major foreign polluters. These revenue sources are determined by the Council, acting unanimously having consulted the Parliament, and must be ratified also by each EU country. The system of own resources remained largely unchanged for three decades and Parliament had long called for it to be overhauled.
The S&D also reiterated that the debate and the decisions on the issue of own resources cannot depend on the actions, or the lack of them, by other international players. The Socialists and Democrats reminded Commissioner Hahn that we should not forget the initial and most important goal – how to get money from own resources for funding the EU Budget and essential recovery initiatives.
Parliament has been at the foreforefront insisting for reforms on the matter. To reduce reliance on contributions based on gross national income and VAT from EU countries, Parliament had called for the introduction of new genuine revenue sources linked to EU policies and objectives. Following the binding agreement reached on 10 November 2020, the proposed timeline for the introduction of new revenue sources stipulates:
By 2023: own resource based on the proceeds of the Emissions Trading System (revenue from the system which restricts the volume of greenhouse gases that can be emitted by energy-intensive industry, power producers and airlines)
By 2023: own resource based on digital services taxation (ensuring fair taxation of the digital economy)
By 2023: own resource based on a carbon border adjustment mechanism (a carbon price on imports of certain goods from outside the EU, would help ensure a level playing field in the fight against climate change)
By 2026: own resource based on a financial transaction tax (ensuring the financial sector pays its fair share of taxes)
By 2026: own resource linked to the corporate sector or a new common corporate tax base
Eider Gardiazabal Rubial, S&D spokesperson in the Committee on budget of the European Parliament explained: “It is the European Union and not someone else that started the global debate on the need for an agreement on tax issues. It is completely legitimate to have different strategies on how to lead this debate, but the inter-institutional agreement between the European Commission and the European Parliament was very clear on this and it is pity the Commission unilaterally decided to break it.We are very sceptical on how useful the decision to postpone the proposal for own resources was. We need a clear answer as to what the Commission will do in case there is no international agreement, on the global tax issue, in October in spite of the positive signals by the G20. After all, we must remember the original goal of the own resources idea which was to fund the EU budget and Next Generation EU. This goal cannot be held hostage to a broader international debate with the participation of the EU.”
Elisabetta Gualmini, S&D negotiator on own resources for the EU budget added “We, the Socialists and Democrats in the EP, are very concerned that the unilateral decision taken by the European Commission a couple of months ago. The postponement of the proposal for own resources for the EU budget could be used in the future by some Member States in the Council of the EU as a negative precedent in order to act against the establishment of a new basket of own resources. In this sense, it is essential for the European Commission to have a “plan B” for the worst-case scenario: we cannot wait endlessly actions needed now to repay the costs and interests of the Next Generation EU.
Last year, Labour MEP Alfred Sant had voted against a European Parliament report on the system of Own Resources of the European Union, arguing that t includes proposals for new EU-level taxes such as the Financial Transaction Tax and the Common Consolidated Corporate Tax Base. “Proposals reflecting EU objectives acknowledged by all, such as the plastic levy agreed upon at Council level, are extremely fit for purpose. Nevertheless, other proposals in the text have been advanced with a regrettable disregard for the damage they would inflict on the economy of individual Member States,” Sant had argued at the time of the vote.