| Author (Person) | Davies, Eric | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Publisher | ProQuest Information and Learning | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series Title | In Focus | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series Details | 1.3.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Publication Date | 01/03/2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Content Type | News, Overview, Topic Guide | In Focus | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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On 10 February 2004, the European Commission adopted a Communication concerning the Union's post-enlargement financial and political development, for the period 2007-2013. This 'financial perspective' identifies three main priorities for the Union in the coming years: completing the Internal Market, promoting citizen-related issues, and strengthening the Union's global role. The Commission argues that these objectives can be achieved in an enlarged Union with an average spending level of 1.14% - a figure less than the current maximum limit of 1.24% of Gross National Income which is allowed under the Treaty. Widely trailed in the media, the proposals had already attracted criticism from a number of the Union's larger members, concerned about the increased financial contributions they would be required to make. Background The financial perspective is intended to provide the European Union with a multi-annual financial planning framework, within which budgets are set. The financial perspective is agreed by the European Commission, European Parliament and Council of the EU. Almost 75% of the Union's budget revenue is obtained from a system of 'own resources', under which the EU receives income from:
This system is not always considered satisfactory: in November 2003, the Commissioner responsible for the Budget, Michaele Schreyer, told European Voice 'the Byzantine system of financing the Union's budget from “own resources”, such as customs tariffs and a percentage of VAT levied by member states, is overdue for reform' and that she would like to see 'the introduction of a direct contribution from taxpayers in member states to fund the EU', possibly by taking money 'from an existing tax, whose basis is harmonized, with the assignment of a specific percentage to the EU budget' (see: The Commission's new proposal suggests that 'One way to overcome the shortcomings of the present system is to strengthen the tax based resource in the financing of the EU budget. A relatively major and visible tax resource payable by EU citizens and/or economic operators could partly replace GNI contributions. That would shift the Union's own resources system from a financing system predominantly based on national contributions towards a financing system which would better reflect a Union of Member States and the people of Europe. In light of the degree of tax harmonisation in the EU, three main candidates could at present be envisaged: 1) a tax on corporate income; 2) a genuine VAT resource; 3) an energy tax.' However, the Communication falls short of making a definite proposal for a new own resource. Rather, the Commission 'will present its analysis and conclusions in the own resources report, which it will adopt before summer 2004. Subject to the conclusions of this report, a process could be launched to create the basis for a new own resource to replace an important part of national contributions in the medium term.' The Commission's new Communication on the proposed financial perspective is entitled Building our common Future: Policy challenges and Budgetary means of the Enlarged Union 2007-2013. The Introduction states: 'The choices to be made on the next financial perspectives are not just about money. It is a question of political direction, to be made on the basis of a clear vision of what we want to do. These choices will determine whether the European Union and its Member States are able to achieve in practice what European people expect. This means a new phase for the Union's budget. It is not about redistributing resources between Member States. It is about how to maximise the impact of our common policies so that we further enhance the added value of every euro spent at European level.' The Commission then elaborates its three priorities for the period, which can be summarised as:
Commission President Romano Prodi said: 'The proposed budget for the next period seeks to create the means to realise these ambitions while remaining under the current ceilings - even after the arrival of 12 new Member States. The legitimate demands on the Union have to be matched by an optimal use of the resources at its disposal.' The Commission believes that the priorities identified will require 'an average spending level of 1.14 % over the years. ... Expenditure levels will increase initially due to the effect of enlargement, but, will at the end of the period be close to the initial level. Payments would lie below the current ceiling of 1.24% of GNI.' However, the Financial Times reported that 'the leaders of Austria, Britain, the Netherlands, Germany, France and Sweden urged Romano Prodi, European Commission president, to set the budget at current spending levels of 1 per cent of GNI' (see: The BBC commented that the issue 'is exposing splits between the net givers - who fear expansion could cost them billions - and the net receivers, keen to maintain their aid' (see: EU squares up for budget battle). The publication of the Commission's Communication is the first step in a process which will see a formal proposal made by the middle of 2004, followed by responses from the Council of the EU and the European Parliament during the year (in Parliament's case, after the June elections). The European Council would be expected to approve a financial perspective (not necessarily the one outlined in this Communication) early in 2005. The new budgetary period would then start in January 2007, and probably last for seven years (previous perspectives have been set for either five or seven years, but the Commission wants to align future arrangements with the five-year terms of the Commission and the Parliament). Further information within European Sources Online European Sources Online: Topic Guide
European Sources Online: European Voice
European Sources Online: Financial Times
Further information can be seen in these external links: EU Institutions European Commission
DG Press and Communication
DG Budget
DG Enlargement
Media organisations BBC News Online
Eric Davies Background and reporting on the week's main stories in the European Union and the wider Europe. |
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| Subject Categories | Economic and Financial Affairs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
