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EU revenues: new proposal not based on fully robust assumptions and still complex

Oct 11, 2018
A proposed reform of the way money is raised to fund the EU remains complex, according to an opinion published by the European Court of Auditors. The auditors identified a number of issues with the proposed reform and called for changes to improve how it would operate.

Since 1988, the funds collected from member states for the EU budget, known as "own resources", have been grouped under three main categories: customs duties, value added tax and a percentage of gross national income (GNI). The European Commission has proposed changing the system for the new 2021-2027 multi-annual financial framework.

The Commission's proposal would retain customs duties, but with a lower retention rate of collection costs for member states, keep the GNI-based contribution as a significant source of revenue and simplify the VAT element. These three own resources would make up 87% of EU revenue. There would also be three new own resources, based on a new common tax scheme for EU companies, on the EU's Emissions Trading System and on unrecycled plastic packaging waste.

In addition, the Commission proposes phasing out the current system of corrections, from which some member states benefit, increasing the revenue ceilings to offset the impact of Brexit and of the European Development Fund’s integration into the EU budget.

"EU financing has not had a major overhaul for 30 years," said Eva Lindström, the Member of the European Court of Auditors responsible for the opinion. "Parts of the proposal will help to simplify the system, for example, the simplification of the VAT element and the phasing-out of corrections. However, overall the proposed system remains complex and we find it is not always based on fully robust assumptions."

Source: European Court of Auditors.