By Filipe Rufino - 29th March 2007
MEPs have warmly welcomed a report calling for a shake-up of the way the EU is funded.
Nine tenths of the EU’s budget, worth €862bn for 2007-2013, comes from member state contributions, agreed after intense and sometimes protracted dramatic negotiations every seven years.
Making the budget more predictable and flexible “is the most important issue for the future of Europe after treaty reform,” said Alain Lamassoure, the report’s author.
Deputies backed the non-binding report by the French centre-right MEP during a plenary session in Brussels on Thursday.
“The current system is unsustainable, obscure, incomprehensible, and unfair [making the EU] unable to fund the policies it has agreed to,” said Lamassoure.
Scrap UK rebate
Lamassoure is calling for an end to the British rebate and similar arrangements by 2014, stressing that all member states should commit one per cent of their gross national income to each budgetary period without exception.
He also dismisses calls for any increase in EU tax powers, arguing instead that member states should share revenues from existing national taxes on corporate profits and trade in goods within the EU.
“Companies and traders benefit from the single market, transport and telecom networks, so the idea of sharing their benefits to the EU should not be a taboo,” said the French MEP.
Pollution taxes on petrol and other fossil fuels should also be considered, he argued.
Cigarettes and alcohol
Among measures floated in the report is a proposed transfer of a share of national alcohol and tobacco taxes to EU coffers, similar to current VAT systems.
But national tax regimes on these two products are far from similar, making a deal difficult, he admitted.
“All is on the table” he said, adding that “there is no more unpopular issue than taxation and there isn’t a more divisive issue for member states than the EU budget”.
The French MEP said he would issue a fresh report with specific tax recommendations following two working meetings with national parliaments in June and November.
Lamassoure’s report draws from an earlier study commissioned by former commission president Romano Prodi in 2003.
"As it stands today, the EU budget is a historical relic…more than 90 per cent of the EU budget is financed via national contributions linked to…narrow national calculations of self-interest, bolstered by unanimity voting," wrote Andre Sapir, author of the Prodi study.
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