MEPs vote for 13% rise in salaries…and tax cuts too

Date: 11/04/02

By Martin Banks

THE three-year deadlock over long-awaited reform of the controversial pay and perks package for MEPs was finally broken this week.

A draft statute to govern members' pay and conditions cleared a key hurdle after it was accepted by the Parliament's legal affairs committee in Strasbourg.

The new package, however, was immediately dismissed as a 'cop out' by some deputies who say it will do nothing to restore public confidence in Euro MPs.

The proposals cover pay, tax, pensions and expenses and will come into effect after the next European Parliamentary elections in 2004.

The details are these:

• Pay: MEPs will receive a salary of €8,500 per month or €102,000 a year. This will mean a pay cut for Italians, who currently earn €9,976 a month, but a substantial increase for UK deputies (now on 7,207 euro), Germans (€6,749) and French (€5,059). The current average is approximately €7,500, so the increase represents a rise of 13%;
• Tax: Members will pay a low 'Community tax' of about 17% into EU coffers instead of their national rates as at present.

Four member states, UK, Denmark, Finland and Sweden, will reserve the right to impose an extra levy, or 'top-up', to bring their tax into line with that paid by their national MPs;

• Pensions: All deputies will be in one pension scheme which will allow them to retire at 55, with a pro-rata reduction in pension drawn;
• Expenses: These will be paid on the basis of actual costs incurred, compared with the present, much-abused allowance, or flat-rate, system.

The package was approved by 24 votes to eight by committee members on Tuesday night (9 April).

Dutch and British Socialists and Green members voted against the proposals, however, saying there was 'no justification whatsoever' for the new salary levels. They suggested a lower monthly figure of €7,400. The dissenting deputies are also incensed that the draft statue contains a 'grandfather' clause which means MEPs who are re-elected in 2004 will be able to opt out of all its provisions.

UK Socialist MEP Bill Miller, legal affairs committee deputy chairman, said: 'The salary is at the top end of the figures which had been discussed and, of course, it will be hard to justify to the public a tax rate of just 17% when most EU citizens pay more tax.'

Miller added: 'I am afraid that this package will do absolutely nothing to remove the 'snouts in the trough' image that most people have of us.

'There is absolutely no justification whatsoever for paying members €8,500 a month. This was a chance to restore the respect of a disenchanted public which has been sadly lost.

'It's a cop out.'

He welcomed, however, the statute's proposals aimed at clamping down on the assembly's generous travel expenses system.

'It means that members will in future be reimbursed only for what they spend and not a cent more,' he said. 'That, of course, is how it should be.' MEPs have been trying to reach agreement on a statute for more than three years but, until this week, all attempts had been thwarted by a powerful anti-reform lobby and disagreement among member states.

The compromise draft, proposed by Belgium during its six-month EU presidency, represents a victory for hardliners such as the Parliament's rapporteur on the issue, German member Willi Rothley. Detailed negotiations on the final level of MEPs' expenses will still have to be hammered out by the Parliament's bureau, made up of its vice-presidents and quaestors, but this is expected to be a formality.

• Even on €8,500 a month, MEPs will be poor relations compared to commissioners and senior officials. The basic monthly salary for a commissioner is €16,362 (the equivalent of 112.5% of the salary of a director-general). The vice-presidents receive €18,180 a month and President Romano Prodi €20,071 a month (equivalent to 125% and 138% of an official of grade A1/6). Commissioners also get a fixed monthly representation allowance of roughly €610 and a residence allowance of 15% of the basic salary. They pay around 30% tax.

The three-year deadlock over long-awaited reform of the controversial pay and perks package for MEPs was finally broken when a draft statute to govern members' pay and conditions was accepted by the European Parliament's legal affairs committee.