Commission chiefs set to back new plan for EU tax

By Dana Spinant

Date: 29/01/04

CONTROVERSIAL plans for a direct EU-wide tax are back on the European Commission's agenda.

At a top-level meeting, directors-general and cabinet chiefs yesterday (28 January) discussed the possibility of introducing a "visible tax to be paid by citizens and/or economic operators".

This could replace, at least in part, the member states' direct contributions to the Union's coffers.

The proposal, included in a document on the financing of the Union in 2007-13, is set to be adopted by the College of commissioners when it meets in Strasbourg during the next

European Parliament session on 10 February.

According to the latest version of the proposal on the 'financial perspectives', dated 25 January, a new and more visible source to finance the EU's budget, or 'own resource', is necessary.

Three options are put forward in the document: an energy tax, a VAT resource, or a tax on corporate income.

The officials have amended the paper to specify that the tax plans are a long-term reflection, and would not apply to the next financial perspectives.

The Commission will make a more detailed proposal for an EU-wide tax in a forthcoming report on the Union's own resources, due this summer.

But a Commission official expressed satisfaction that the tax proposal was included in the communication, even if the idea is still vague at this stage.

"We want to keep it on the agenda," he told European Voice.

A Commission spokesman admitted that an EU tax "is a sensitive matter".

"We had better proceed in small steps. We launch the idea now, in very general terms, we say a bit more in the report this summer, and we see if feelings will be more open to the idea," he added.

The cabinet bosses and directors-general broadly agreed on the main priorities and the structure of the EU budget in 2007-13, clearing the way for the adoption of the financial perspectives proposal by the commissioners at Strasbourg.

However, the question of exactly how much members states should cough up - an issue which has already set the Commission on a collision course with the Union's largest member states - will be discussed by commissioners alone.

The leaders of Germany, the UK, France, Austria, Sweden and the Netherlands have written to Romano Prodi, the Commission president, urging him to cap the Union's budget at 1% of gross national income (GNI) until 2013.

According to the draft currently being discussed, the Union's spending would rise to 1.22% of GNI in 2013, or around €153 billion. This "ambitious percentage" as one official put it, was proposed by the Commission president.

The budget Commissioner Michaele Schreyer had initially suggested a budget of around 1.15%.

French Commissioners Michel Barnier, institutional reform and structural funds, and Pascal Lamy, trade, are said to be on Prodi's side, asking for a budget close to the present ceiling of 1.24%.

On the other hand, UK Commissioners Chris Patten and Neil Kinnock, in charge of external relations and internal reform, and their Dutch colleague Frits Bolkestein, single market, are backing Schreyer's case.

Under the present proposal, the EU's budget would be split into five major spending areas: sustainable development (competitiveness, employment and sustainable development, cohesion and structural actions); management of natural resources (agriculture and environment); citizenship, freedom, security and justice; external action, and; administrative spending, on EU institutions and personnel.

Article discusses draft Commission papers on the Financial Perspective 2007-2013 proposals due to be adopted by the Commission on 10 February 2004. It floats the idea for a EU-wide direct tax, although there is general acceptance that the idea will not be adopted by Member States at this stage.