The EESC provided its policy recommendations for a new generation of own resources for the EU budget, which were ultimately not taken up by the Commission in a proposal for an adjusted package for the next generation of own resources, released on 20 June 2023. The EESC opinion urged the Commission to first and foremost further develop the new set of rules that would govern corporate taxation in the EU (BEFIT). The EESC also suggested considering an EU-wide tax on digital transactions and an additional levy targeting companies importing products from third-country manufacturers that do not ensure proper protection of workers.
Revenue sources for the EU budget need to be rethought in the context of post-pandemic budgetary pressures faced by Member States, the ongoing international tensions and the current higher interest rate environment. A resilient and diversified flow of revenues will allow the EU to repay the joint debt raised for the recovery plan and to avoid an excessive increase in the contributions to the budget based on the gross national income of Member States.
We advocate for a strong EU budget, providing the European Union with the necessary financial means to achieve its political ambitions, and for moving to more genuine own resources that would help steer us away from the focus on net balances, which is detrimental to European integration, rapporteur Philip von Brockdorff commented during the opinion adoption in plenary.
A Commission proposal for an adjusted set of own resources, based on corporate taxation and released on 20 June 2023, completed the three other proposals for new sources of revenue that had been presented in 2021 but have not yet been adopted by the Council: revenues from emissions trading (ETS), from the EU Carbon Border Adjustment Mechanism (CBAM) and from a share of residual profits from multinationals.
BEFIT and a global financial transaction tax
As a prerequisite to proposing an own resource based on corporate taxation, the EESC urges the Commission to develop the Business in Europe: Framework for Income Taxation (BEFIT) tool as soon as possible. The Commission should set clear aims in relation to simplifying the tax landscape and ensuring the competitiveness of existing new tax directives. In particular, the EESC highlights the need to base the BEFIT rules on harmonised definitions and standards as well as a more refined estimation of the potential additional revenues linked to implementing it.
The Committee also deems it reasonable to explore the possibility of including financial services to BEFIT or of working on a global financial transaction tax (FTT) as proposed by the European Parliament while at the same time assessing impacts of the proposal. The new tax provisions should then be combined with targeted rules aimed at devoting part of the additional expected tax revenues to EU own resources.
Go beyond CBAM
The idea behind the Carbon Border Adjustment Mechanism (CBAM), agreed between the Council and the Parliament and proposed as an own resource in 2021, was to motivate the EU's trading partners to decarbonise their production alongside the EU. Further to this, the EESC asks the Commission to consider an additional levy targeting EU companies importing products from third-country manufacturers that do not ensure proper protection of workers. This option would only be considered as long as it is compatible with WTO rules and subject to clear criteria for applying it. At the same time, the EESC calls again for some form of export relief so that EU companies can compete on third markets.
Finally, pursuant to the OECD/G20 Inclusive Framework, whereby a standstill and withdrawal period concerning digital taxes had been agreed on, the EESC is of the view that an EU-wide tax on digital transactions to increase own resources could potentially be considered. However, this would only apply in the event that the agreed rules of the OECD/G20 Inclusive Framework are not respected by other major trading partners.
The proposal the Commission presented on 20 June does not take up the EESC's proposals. Because BEFIT still needs to be developed, the package proposes a new temporary statistical own resource based on company profits. In addition, the Commission also proposes to adjust the own resources proposals based on the Emissions Trading System (ETS) and CBAM compared to the original proposals from December 2021.