EU tax creeps up the agenda

The EU is mulling plans to introduce a European-wide tax to fund its €100bn budget between 2007-2013.

European Commission chiefs this week discussed a direct tax for European citizens which would form part of member states' contributions to the EU budget.

The plan is part of a draft communication on the EU's 'financial perspectives' that commission president Romano Prodi will present to commissioners in Strasbourg for consideration on February 10.

The leaked proposal claims that more "visible" resources are necessary for the future of the EU budget to improve confidence in how the EU is funded.

Alternative cash sources being mooted are a genuine VAT resource, an energy tax or a tax on corporate income.

EU budget chiefs have already upset six of the richest EU countries, which have called for a contribution limit of one per cent of GDP from 1.24 currently in place.

And the UK has already opposed the possibility of reshaping its budget rebate, negotiated in the eighties.

This rebate, based on the fact that the UK receives few agricultural subsidies despite being one of the biggest contributors to the EU budget, could be replaced by a system by which all countries paying in more than they get back would be eligible for some kind of rebate.

After commissioners review the proposal in February, a more detailed communication will be published in the summer.

 

 

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