New resources are the paradigm shift needed to harness the EU’s full potential
by Dacian Cioloș and Valérie Hayer
The EU is facing many common challenges, from Covid-19 to economic recovery and climate change. From very early on, MEPs understood that no single Member State can possibly face these challenges alone. Through long and difficult negotiations, the European Parliament persisted and finally managed to get the EU Heads of State to make a considerable leap forward in the consolidation of our common efforts by way of agreement on the EU’s common budget.
In total, more than €1. 8 trillion will enable the EU not only to rebuild its economy but also to lay new solid and lasting foundations for the Green deal and digital agenda. Parliament has obtained an additional €16 billion, which will triple the budget for health, double the funding for the “Rights and Values” programme and it will bring us closer to the 3% GDP mark for research and will strengthen youth programmes like Erasmus.
It will also help our entrepreneurs and SMEs through InvestEU and help our borders through Frontex. We are also taking a step forward in our ambition for the environment with a reaffirmed objective of 30% of spending on climate and a 10% objective to safeguard biodiversity. The Renew Group in the European Parliament has been a crucial negotiator in this process. This agreement is the result of several months of hard work and determination by the entire Renew Europe political family and we remained steadfast with two key objectives, to strengthen solidarity and values within the EU while improving the management and autonomy of our budget so that it is not an extra burden on taxpayers.
The development of new European tax revenues, called “own resources”, is a real paradigm shift for the EU and is long overdue. Customs duties were the last genuine own resource created by the EU and that dates back to a half a century ago. New own resources are a tool to facilitate the financial functioning of the Union on a fair basis, benefiting all its Members.
This was a key objective for Renew Europe, in combination with a robust conditionality mechanism to ensure the respect of the rule of law in Member States, the Rule of law.
Conceived and developed at the beginning of the EU, own resources had been relegated to the backroom since the 1980s in favour of national contributions. This policy, made our Union a prisoner of the cumulative constraints of 27 different finance ministries and short-term national interests, to the detriment of a common EU vision and approach. National contributions lock the debate into the permanent dictatorship of the “rate of return”, with each country seeking to recover as much as possible of what it contributes in to the common pot. It is precisely for this reason that Renew Europe has fought tirelessly for own resources, vital in order fully realise a common European ambition shared by all Member States.
After more than a year of difficult and sometimes tense negotiations , this fight has ended in a resounding victory. From 2021, a contribution dependent on the recycling rate of plastic waste will have to finance the European budget. In addition, there will be a European tax on digital giants from 2023, alongside a carbon adjustment mechanism at borders and revenue from the internal carbon market. It will then be the turn of a tax on financial transactions to be introduced, a victory snatched at the very end of the negotiations. Then it will be the turn of a tax on financial transactions for an expected entry into force in 2026 at the latest, a further step forward in comparison to the position of the Heads of State and Government. Also in 2026, revenue will be generated, possibly from the harmonisation of tax rules for multinationals benefiting from the internal market or from a direct contribution from them.
In total, and as a very minimum, the European Union will be able to count on a total of €35 billion in additional revenue each year from once these own resources are definitively approved and come into effect.
Member States finally agreed to shift the burden of debt repayments to those who benefit from the internal market but do not fairly contribute to it. Concretely, this means the digital giants and big companies from third countries, especially the Chinese, who export massively to Europe without being subject to the same high environmental standards. It refers also to multinationals practising tax optimisation, on big polluters and offenders in terms of recycling and on financial institutions practising speculation all of who capitalised on this crisis.
Since 1952, the history of European integration has been marked by crises and extraordinary achievements, often both going hand in hand. This deal is one of them. It marks a return in force of a genuine vision for a common Europe, respectful of national competences, but freer from budgetary constraints. Europe is being transformed into a strong political entity that provides concrete and tangible solutions for all its citizens.