In the current climate of crisis, the European Parliament supports the proposal for new EU revenue sources to protect the EU budget against future shocks.
Given the many difficulties associated with the EU budget, including the consequences of the pandemic, the war in Ukraine, and the energy crisis, Parliament supported the creation of a basket of new revenues that aligns with EU priorities.
The three new so-called 'own resources' are as follows: revenues from the Emissions Trading System (ETS), funds generated by the proposed EU Carbon Border Adjustment Mechanism (CBAM), and revenues related to the corporate income tax of international companies, based on a proposal agreed upon by the OECD/G20 in the summer.
The Commission estimates that from 2026 to 2030, the new revenue sources could bring up to EUR 17 billion per year into the EU budget. These revenues will help repay the borrowing that the EU undertook to fund grants from the NextGenerationEU instrument, finance the Social Climate Fund, and help build the new emissions trading system, which will facilitate the transition to a decarbonised economy.
“The European Union needs new own resources, at the very least to repay the loan taken to finance the NextGenerationEU instrument. If such new own resources are not found, after 2027 we will have to cut spending on EU programmes by more than EUR 15 billion a year. That would mean turning Next Generation EU into No Generation EU.” This is how the situation was described by one of the Parliament's co-rapporteurs José Manuel Fernandes (EPP, Portugal).
“Why do it now? At the moment, we are finalising the drafting of these legislative acts, particularly regarding the carbon market reform and the carbon border tax. Once these acts are adopted, member states will have to convert them into own resources so that we can fulfil our commitment and repay the loan,” noted the other co-rapporteur Valérie Hayer (“Renew Europe”, France). She also added:
“By remaining without these two types of own resources, we only have two alternatives: either increase national contributions, and thus also tax rates in the member states, or cut spending for European programmes. That would mean reducing the allocation for the Common Agricultural Policy, funding for Erasmus+... We will not allow that. That is why we need own resources!”
Increasing revenue
The EU budget is made up of customs duties, a percentage of the VAT collected by EU countries, and a portion of the member states' annual gross national income. It also includes other funds, such as fines collected from companies that violate EU competition laws and taxes imposed on the salaries of EU employees.
However, in 2020, the EU agreed on a record-breaking stimulus package of more than EUR 2 trillion in response to the economic problems caused by the pandemic, thereby increasing the long-term budget and introducing a temporary recovery instrument, NextGenerationEU.
This meant that the EU could take on debt obligations to help EU countries fight the crisis. To repay the borrowing, EU institutions agreed to introduce new own resources to diversify and strengthen the Union's revenues.
One of the types of own resources, based on the amount of non-recycled plastic packaging waste, has been available to the Union since 2021, and a digital levy will be introduced from 2023.
Parliament adopted the proposal on own resources at the plenary session of 21–24 November 2022. Following consultation with Parliament, the Council must adopt the decision unanimously. For it to enter into force, it must be ratified by all member states.