- New EU revenue based on the Emission Trading System, the Carbon Border Adjustment Mechanism, and the OECD/G20 global corporate tax agreement
- Funds urgently needed to repay debts from NGEU recovery fund borrowing
- New own resources agreed in legally binding roadmap from 2020
On Wednesday, Parliament paved the way to the EU’s introduction of the next generation of “own resources”, sources of revenue for the EU budget.
With 440 votes in favour, 117 against and 77 abstentions, MEPs have taken an important step towards implementing an amendment to the law governing the EU’s revenue, the so-called “Own Resources Decision” (ORD). This amendment, once adopted by Council and ratified by all member states, will introduce three new income sources: revenues from emissions trading (ETS); the resources generated by the proposed EU carbon border adjustment mechanism (CBAM); and a share of the reallocated profits of very large multinational companies (based on Pillar 1 of the OECD/G20 agreement).
Start preparing the next basket of own resources, respect the roadmap
MEPs have called on the Council to adopt quickly this decision and ensure the timely introduction of these new own resources. They add 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”.
They also stress that, as agreed in the legally binding roadmap set out in the Interinstitutional Agreement, the Commission is expected to present a proposal for a second set of new own resources by the end of 2023, which could include a financial transaction tax and an own resource linked to the corporate sector.
Make the EU budget future-proof
In its recent resolution on next year’s EU budget, Parliament said progress on new own resources is essential both for the financing of debt incurred under NextGenerationEU (NGEU) and “for the financial robustness and implementation of the current and future multiannual financial frameworks” – the EU’s long-term budgets.
In a separate vote on Tuesday, Parliament adopted a resolution on the implementation of the NextGenerationEU borrowing strategy, drafted by the same co-rapporteurs in charge of the EU’s own resources file, by 474 votes in favour, 80 against and 78 abstentions.
José Manuel Fernandes (EPP, PT), co-rapporteur: “For NextGenerationEU, the Commission borrowed EUR 800 billion on the financial markets, and EUR 420 billion of this sum is being used to fund the recovery and resilience plans for member states. This has to be reimbursed through the European Union budget, by 2058. But we cannot burden the next generations with this. We cannot cut forthcoming EU programmes either, and the cost of paying off the debt after 2027 is high: more than 15 billion euro a year. Hence the increasing importance of new revenues to pay off the debt and to face new challenges through common projects.”
Valérie Hayer (RENEW, FR), co-rapporteur: “The European institutions have made a commitment to European citizens that the debt incurred by NextGenerationEU will not be repaid by raising taxes or cutting EU programmes, but by creating new own resources. This is why the Parliament, at a time when we are finalising our negotiations on the reform of the carbon market and on the carbon border adjustment mechanism, is reconfirming, through this vote, its position clearly and forcefully. It is a question of respecting our commitments as political decision-makers, and of our credibility with investors. Let’s not waste any more time: Council must quickly implement this decision.”
The ORD is the legal basis that provides for the revenue sources of the EU budget, and it is also the legal basis authorising funds to be borrowed on the financial markets to finance the Next Generation EU Recovery Instrument (NGEU). The Council adopts the decision by unanimity after having consulted the European Parliament. Before entering into force, the ORD needs to be ratified by all member states.