Lewandowski’s EU Tax Gamble – the thing is, the EU already collects its own taxes

Phillip Souta

Objections in principle to an “EU tax” seem to ignore the fact that we’ve already got something very close.  A chunk of the EU budget already comes from its “own resources”.  The debate on this issue would make more sense if we acknowledged that from the outset.

Janusz Lewandowski (European Commissioner responsible for Financial Programming and Budget) is going to be fighting an uphill battle in September when he proposes EU-wide taxes.  Earlier this month he rather bravely suggested that the member states might appreciate paying less directly in favour of allowing the EU to levy taxes on (for example) financial transactions, air travel or carbon.  Britain, Germany and France all voiced strong and immediate opposition – immediately scotching the idea.

Much of the subsequent commentary focused on how dangerous a step this would be given that the levying of taxes was the prerogative of nation states.  This would be a step towards a more centralised, “federal” Europe, say the critics.  Shortly after Lewandowski made the suggestion, Lord Sassoon, a Minister at the Treasury, said the British government “is opposed to direct taxes financing the EU budget. The UK believes that taxation is a matter for member states to determine at a national level and would have a veto over any plans for such taxes.”

Whether one agrees with the objections or not, the commentary seemed to miss out one vital piece of background information.  The EU already gets about 15% of its budget from its own revenues.  They may not, strictly speaking, be “taxes”, but they certainly are not part of the “member state contributions”.  Agriculture levies, sugar levies and customs duties – what the EU calls its “Traditional Own Resources” (TOR) – made up 14.3% (about €17 billion) of the EU’s total revenues for that year.  National contributions made up 77% (about €94 billion).

As the EU’s budget has grown to about €140 billion per year, the proportion of that accounted for by the EU’s own resources has plummeted to less than 15% compared to 89% in 1988.

Presumably any further EU levies would fall under that heading.  Commissioner Lewandowski is presumably suggesting that the member states might want to increase the proportion of the budget that comes from the EU’s own resources in order to reduce member state contributions.  It’s perfectly reasonable to argue that this shouldn’t take place, or indeed that the EU shouldn’t have any of its own resources as a matter of principle, but to say the latter, surely reference needs to be made to the €17 billion the EU already collects off its own bat.