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On June 28, 2017 the Commission presented the fifth reflection paper, thereby opening the debate on the future of EU finances. This week, it is the turn of the European Parliament to deal with the issue. The majority of MEPs welcomed the discussion. The Commission also announced that it would publish the multiannual financial framework only in spring next year and not already by the end of this year in order to take into account the debates on the reflection paper and progress in the Brexit negotiations.

 

The now presented reflection paper on the future of EU finances is the final document, which the Commission submits within the scope of the discussion on the future of the EU. Similar to the previous reflection papers – among other on the European Pillar of Social Rights, Globalisation and Deepening of the Economic and Monetary Union – this too will be presented following the White Paper on the Future of Europe, which was presented in March this year and prior to the State of the Union Address by Jean-Claude Juncker in September.

 

The discussion on the future of EU finances is guided by the five scenarios presented in the White Paper: continuing as before; restricting the EU exclusively to the Common Single Market; a Europe of different speeds with a coalition of those willing to integrate and a “rest”; a focus on fewer policy fields, but with stronger and more efficient integration, and finally a political integration without lowering one's sight, which might eventually result in the United States of Europe.

 

Depending on which of the scenarios the EU and its Member States decide, respectively, this also requires a different focus of the overall EU budget. It is therefore that the amount and purpose of spending, the source of revenues and spending by policy fields differ for each of the scenarios. However, independent of this, the Commission emphasises that the budget apart from becoming more efficient and simpler, should generate real added value. Over the years, a complex and sometimes opaque system had developed, where some Member States receive “rebates”, contributing less into the common budget than they should, based on their economic output. This is to be stopped in the future. Each of the scenarios provides for abolishing the granted rebates and thereby a simplification of the system. Considerations, which were basically also welcomed by the Social Democrat MEPs.

 

At the same time, the Commission document points out that it was difficult for the tight budget to cope with new challenges and expectations on the global role of the EU. Günter Oettinger, Commissioner for Budget and Human Resources, detailed the expectations on the EU to assume more responsibility with respect to migration as well as internal and external security and defence policy. In addition, the EU played an important role as provider of humanitarian aid and foreign aid as well as in respect of combating climate change. This increases tasks on the expenditure side, whilst the income side is reduced by the expected exit of the United Kingdom.

 

Some of the scenarios, for example those, which provide for a comprehensive or partly stronger integration of certain countries or in specific sectors, in turn propose the development of single or several new own resources. Currently the budget is mainly made up of contributions by the Member States, tariffs and VAT duties. As the reflection paper suggests, to these might be added income from a Financial Transaction Tax, a green tax or from a Common Consolidated Corporate Tax Base. MEPs of the major groups also commented that fines, which were imposed on companies should also go to the EU and not to national budgets. It is also interesting that the Commission agrees with considerations to couple payments from the EU budget to the rule of law in the Member States and to “key European values”, which were increasing raised lately.

 

Further information:

Reflection paper on the future of EU finances

The future of EU finances: Five scenarios - implications

The future of EU finances: Facts and figures

AK EUROPA: White Paper on the Future of Europe

AK EUROPA: Reflection paper on the European Pillar of Social Rights

AK EUROPA: Reflection paper on Globalisation

AK EUROPA: Reflection paper on deepening the Economic and Monetary Union