Austria backs direct EU consumer tax

By Bruno Waterfield - 18th January 2006

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Calls for direct consumer taxes to fill Brussels coffers have been taken up by the Austrian EU presidency.

Austrian leader Wolfgang Schuessel told MEPs that the idea should be considered as an alternative to traditional EU budget battles.

A December 2005 summit saw deep divisions emerge over spending between capitals that pay more to the EU than they get back and new poorer member states that benefit from the cash.

“Europe needs a strong way of financing itself,” said Schuessel. “We’ll kill ourselves next time, the member states, if we negotiate only on this basis.”

Plans for consumer taxes are not new, an EU tax was mooted by the European commission in the original budget proposals for 2007 to 2013.

“It’s absurd that short-term speculation can take place without being taxed. It can’t be that transport by air or by boat is not subject to taxation,” said Schuessel.

“It’s absurd that there are tax gaps - that international aviation is part of a tax gap."

The idea of an EU tax to raise European revenue from consumer levies appeals to pro-European Austria – one of the countries that pays out more from Vienna’s national treasuries that it gets back.

But other countries such as the UK oppose any moves to give the EU any taxation powers at the expense of national treasuries.

An EU consumer tax on holiday flights or travel as part of a VAT increase on everyday life may not turn on citizens either.

Nevertheless, Schuessel is urging the commission to float the idea again during a mid-term spending review between 2007 and 2013.

“The idea of a self-financing system is not popular everywhere but it’s my task as president in office to make necessary proposals even if they are unpopular,” he said.

Back in July 2004 the commission proposed “a main fiscal resource based on either energy, VAT or corporate income tax” by 2014.

In the heady days before EU constitution rejections in France and the Netherlands, the argument ran that direct taxes would bring Brussels closer to voters.

“The proposal reflects the nature of the EU as a union of member states and citizens by clarifying the link between the taxpayer and the EU budget,” the commission said on July 14 2004.