MEPs tie spending plan to reform of budget funding

By Martin Banks

Date: 31/03/05

The European Parliament is to demand an accord on new ways of funding the EU's budget before it backs the Union's spending plans for 2007-13.

A report debated by MEPs yesterday (30 March) makes clear the Parliament's determination to link agreement on the financial perspectives with reform of the way the EU budget is financed.

It does not specify how the budget should be financed - this will be the subject of a separate report to go to the budgets committee on 18 April.

But the report's author, German centre-right MEP Reimer Böge, says this does not include the possibility of an EU-wide tax.

"The budgets committee will soon make a proposal on this but an EU tax is certainly not on the cards," he said.

Currently, revenue for the EU budget is generated from four main sources, the biggest of which is a proportion of each member states' gross national income (GNI).

Böge says new ways of funding have to be found to "help resolve the old battlegrounds" between member states over what they pay and what they get from the Union's coffers.

One such battleground is the rebate granted to the UK, which last year amounted to €4.6 billion. Most member states say that the UK should no longer receive its rebate.

The Commission proposed a "general correction mechanism" whereby all countries which make large net contributions to the EU would receive a rebate.

Böge's report was discussed by members of the Parliament's temporary committee on the financial perspectives and is to be backed by MEPs in plenary session next month.

But the committee's vice-chairman, UK Socialist Terry Wynn, said it was "unrealistic" to attempt to link the two issues, as it was for member states to determine "how any new funding system works, not [for] the Parliament".

The Böge report says the Commission's proposals on the next financial perspectives are an "acceptable basis" for negotiations.

The Commission proposed total EU expenditure for 2007-13 of €928,700 bn, or 1.14% of the EU's GNI. Six of the biggest net contributors to the EU budget request a 1% cap on the budget.

The report insists that education and training should be regarded as a "high priority" and calls for a substantial increase in funding for the area of freedom, security and justice.

The European Parliament on 30 March 2005 debated a report by German centre-right MEP Reimer Böge making clear its determination to link agreement on the financial perspectives 2007-2013 with reform of the way the EU budget is financed.