Experts propose EU levy corporate tax under budget reform

A group of experts called today for "substantial reform" of the European Union budget that might see Brussels levy corporate and other taxes to cope better with crises.

The proposals by the group, led by former Italian prime minister Mario Monti, called for the EU to stop depending mainly on the 28 member states for revenue as well as for making it more understandable to average Europeans.

"This type of document is totally unreadable by a European citizen," Jean Arthuis, who chairs the budget committee at the European Parliament, told a press conference in Brussels as he welcomed some of the ideas.
 

EU officials fear popular support for the European project is declining with the Brexit vote and the rise of eurosceptic parties.

Arthuis added that the multi-annual budget framework "is so narrow that in order to tackle crises" the EU is forced to resort to trust funds, intervention funds and various financial instruments.

The report from the High Level Group on Own Resources, which is made up of former ministers and others, highlights proposals for a budget supported by its own revenue, which account for only a tiny share of the total.

Since the 1980s, member state contributions have gradually replaced EU resources and now account for 80 per cent of the financing of the European budget.

The group said its research "make the case for a substantial reform, where changes on the revenue side are an integral part of the multi-annual financial framework," which sets limits for the annual general EU budgets.

Among proposals raised were an EU corporate income tax, financial transaction tax and other taxes on financial activities as well as a levy on carbon dioxide output, an electricity tax and motor fuel levy.

The report said Britain's exit from the EU following the shock referendum in June last year presented an opportunity to reform the budget as London will no longer receive a tax rebate for its financial contribution.

The report's publication comes ahead of negotiations for the 2021-2027 budget framework. The European Commission, the EU executive, is due to be briefed on the report next week and EU finance ministers will also be updated soon.

The European Parliament last month adopted an EU budget of nearly 158 billion euros for 2017, including a hefty increase to tackle the migration crisis and terrorism.