The European Parliament endorses new EU own resources to be introduced in the EU budget
The plenary session of the European Parliament gave the green light with 440 votes in favour, 117 against and 77 abstentions to the introduction of new sources of revenue for the EU budget. As proposed by the European Commission in December 2021, new resources should derive from an extended emissions trading scheme (ETS), a carbon border adjustment mechanism (CBAM), and a share of the reallocated profits of very large multinational companies.
The EU Parliament's position is part of the procedure introduced in the Treaty of Lisbon concerning the establishment of new categories of own resources and abolishing existing ones in the EU budget. The consultative role of the European hemicycle is a necessary step before the EU Council's unanimous adoption of the decision.
More specifically, 25% of revenues from ETS allowances auctioned, 75% of the income generated by the carbon border adjustment mechanism (CBAM), and 15% of the share of the residual profits reallocated to EU Member States under Pillar I of the OECD/G20 agreement on international corporate taxation would be paid into the EU budget as own resources. In its proposal, the European Parliament originally asked to devote 100% of the CBAM income to the own resources part of the EU budget.
The adopted text also stresses that the “Commission needs to take further timely actions if the proposed new own resources are not adopted or do not generate the anticipated level of revenue”. This additional funding will help the EU to respond to growing demands and tackle newly occurring crises, but finance of existing programmes and long-term multiannual financial framework (MFF) commitments should not be limited, the report reads. More importantly, new resources are needed in order to finance the debt incurred under the post-pandemic Next Generation EU funds, the text says.
In this regard, the EU Parliament stressed in a separate non-binding resolution that the repayment of debt and borrowing costs from the EU recovery instrument must be placed outside the MFF ceilings of 0,6% set to cover all Union liabilities resulting from NGEU borrowing. Deputies raise concerns about the fact that these costs, in a context of rising interest rates, could lead to funding for programmes such as Erasmus+, EU4Health, Creative Europe and Citizens, Equality, Rights and Values being reduced.
The new own resources will be gradually introduced as of 1 January 2023. Over the 2026-2030 period, revenues for the EU budget will have the potential to reach up to €17 billion a year (in constant 2018 prices). A second new set of new resources is expected to be proposed by the European Commission by the end of 2023, with the possibility for it to include a financial transaction tax and an own resource linked to the corporate sector. The initiative goes in the direction of reducing the Gross National Income share in the EU budget revenue mix and ensure sustainable financing of the Union budget on a long-term basis.