31. 12.83 Official Journal of the European Communities No C 358/35 
Opinion on the future financing of the Community — draft Decision on own resources 
A. LEGAL BASIS FOR THE OPINION 
On 23 May 1983 the Council referred the abovementioned matter to the Economic 
and Social Committee in accordance with Article 201 of the Treaty establishing the 
European Economic Community and Artjcle 173 of the treaty establishing the Euro­
pean Atomic Energy Community. 
Procedure 
The Section for Economic and Financial Questions, was instructed to draw up the opi­
nion on this matter. Mr van der Mensbrugghe was appointed rapporteur. 
The Section opinion was adopted at the 81st meeting held on 18 October 1983 by 23 
votes to three, with seven abstentions. 
B. OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE 
The Economic and Social Committee opinion was adopted by 108 votes to three, with 
seven abstentions, during the 211th plenary session held on 26 and 27 October 1983. 
The full text of the opinion is as follows: 
I. Introduction 
Deeply disturbed by the Community's present 
alarming plight, the Committee would point out that 
the current financial stalemate is merely sympto­
matic of a more deep-seated political unrest that is 
jeopardizing the Community's objectives. 
The Committee calls on the relevant institutions and 
on economic and social interest groups, to bear 
these goals in mind and to combine their efforts to 
prevent a retreat into narrow nationalism and to 
protect the Community by ensuring development 
along the path of European union. 
Great as the current financial difficulties are, the 
Committee is adamant that they must not be 
allowed to comprise the progress which the Com­
munity has made. It warns that an enfeebled Com­
munity would place people in all Member States at 
serious risk in many areas. 
1. The economics crisis, involving growing unem­
ployment, inadequate economic growth and signifi­
cant economic and social differences within the 
Community, has led to a fissiparous reaction in 
some quarters that could threaten the momentum 
and undermine the foundations of the Community. 2. The Community's merits are, however, clear for 
all to see: it has been a stabilizing force and a haven 
of peace in Europe; it has strengthened democratic 
society; and it has paved the way for an exception­
ally rapid advance in economic development and 
living standards. 
3. Convinced as we are that the serious internal 
and external problems now confronting the Com­
munity cannot be solved by uncoordinated efforts, 
we believe that it is vital to keep the Community 
intact and preserve its vitality. 
4. The Community thus needs to be strengthened, 
and appropriate action should be taken to this end. 
A strong Community can only benefit its constitu­
ent parts, including future members. 
II. Basic principles 
1. The tendency to want to go it alone in solving 
problems is a shortsighted attitude. The European 
Community implies solidarity, including financial 
solidarity. Without solidarity there can no longer be 
a Community. 
No C 358/36 Official Journal of the European Communities 31. 12. 83 
2. The proposed increase in Community resources 
comes at a time when Member States are having 
great difficulty in balancing their budgets and are 
having to impose strict public spending limits. In 
the circumstances, it is only natural that the Com­
munity too should insist more than ever on even 
greater emphasis on 'economy', 'efficiency' and 
'rationalization'. 
3. Every type of rationalization and economy mea­
sure — particularly, though not exclusively, in agri­
culture — is therefore welcome. Anomalies need to 
be removed, a distinction made between essentials 
and non-essentials, and priorities fixed. 
4. Although such rigour is needed, it must be 
applied intelligently. There are, for example, false 
economies in: 
— transferring Community expenditure back to the 
Member States; such action would be of no 
overall benefit to the Member States and might 
even be financially detrimental since the advan­
tages to be gained from integration would dis­
appear. It is probably true to say that individual 
Member States could derive gain from the trans­
fer of certain items of expenditure, as their con­
tributions would then be significantly lower. Yet 
the fact remains that compartmentalization of 
the advantages and disadvantages inherent in 
membership would be damaging to the Member 
States and to the Community at large; 
— failure, for reasons of cost, to adopt policies that 
are badly needed by the Community. In the 
long run, failure to act can be much more costly 
than action taken at the right time. 
5. Political, psychological and economic factors 
dictate that any increase in resources must be 
backed by savings and rationalization wherever 
feasible. In spending policy, the major considera­
tion at all times has to be whether action is rational 
from an economic viewpoint. Consequently new 
policies should be developed only where absolutely 
necessary, especially in areas where Community act­
ion can be more effective than national measures. 
What is of crucial importance is that expenditure 
should be warranted and not just serve the interests 
of one or other Member State. It goes without say­
ing that such expenditure must be properly moni­
tored. 6. The principle of the 'fair return' is fundamen­
tally at odds with the spirit of solidarity on which 
the Community is founded (•). 
Eagerness to achieve some kind of balance between 
the advantages and disadvantages ultimately to be 
expected from membership of the Community is 
perhaps understandable. 
Yet this balance cannot be measured in purely 
financial terms. The advantages — direct and indi­
rect — of integration permeate all economic and 
social spheres and in most cases cannot be quanti­
fied. 
Further, to want to get as much out of the Com­
munity as one has put in would make the concept of 
'own resources' meaningless, refute the idea of a 
single budget and indeed jeopardize the Com­
munity's very raison d'etre.Where costs and disad­
vantages weigh more heavily on some countries 
than on others, the correct solution is to frame 
appropriate common policies which will benefit 
both the individual Member States and the Com­
munity as a whole. These policies will take some 
time to come into effect. Meanwhile other transi­
tional measures may be required to bring about the 
necessary corrections. As the Committee has been 
consulted solely on the Commission's proposal, 
such measures fall outside its terms of reference. 
III. Community spending 
1. Assuming that Community spending is 
designed to secure both economic development and 
social protection, the main objective must be growth 
and renewed momentum, as well as solving the 
problem of unemployment, particularly youth 
unemployment. 
New common policies are not only necessary but 
urgent, as the Committee has repeatedly pointed out 
while calling for greater economic and social con­
vergence. 
(') The Committee has recognized the need to transfer 
funds from rich countries to poor countries (opinion 
on the enlargement of the European Community to 
include Greece, Spain and Portugal (Brussels, 1979), 
170th plenary session on 17 and 18 July 1979 (OJ No 
C 247, 1. 10. 1979, p. 24). 
31. 12. 83 Official Journal of the European Communities No C 358/37 
Some policies (for instance, in the monetary, trans­
port, internal market, social protection or environ­
ment spheres) seek primarily to create the condi­
tions required for economic recovery. Certain of 
these policies are inexpensive yet are highly effec­
tive. 
Others (scientific research, energy, new technolo­
gies, etc.) are costly but Community action will be 
more profitable and rational than national activities. 
These should be seen in terms of an investment in 
future security, designed to equip the Community to 
face up to its competitors. 
As the financial expression of expenditure and 
resources, the Community budget must give a 
clearer picture of the various economic alternatives, 
also in respect of common policies, so as to facili­
tate a proper socio-economic appraisal of such 
resources and expenditure. 
2. Agricultural spending has undoubtedly reached 
alarming proportions in recent years. 
Though the positive achievements of the CAP can­
not be overlooked, nor its social and economic 
objectives ignored, there are undoubted distortions, 
especially in the shape of surpluses. The internal 
and external causes of this state of affairs are many 
and varied. An overhaul of the system is therefore 
needed so that production can be brought under 
control or reshaped, probably in stages. At the same 
time, however, there must be no straying from the 
objectives of Article 39 of the Treaty. 
The Committee is therefore bound to applaud the 
Commission's attempt to reduce the share of Com­
munity spending devoted to agriculture. In rational­
izing such spending care must be taken to avoid 
anomalies and achieve savings wherever possible. 
However, agricultural expenditure should include 
only those items that are directly related to the com­
mon agricultural policy. The Commission to some 
extent does just that. 
In particular the Committee advocates reappraisal 
of the desirability of including expenditure con­
nected with (a) external relations agreements, (b) 
compensation agreements and (c) MCAs. share of agricultural expenditure is highly question­
able since (a) there is absolutely no guarantee that 
essential agricultural reforms would be duly carried 
out and (b) expenditure must, as a matter of princi­
ple, only be undertaken when it is recognized that 
there is a need for it. 
4. In that the purpose is to bring agricultural 
spending down to a more acceptable level, the thres­
hold figure of 33 % is not unreasonable as a rough 
guideline, viewed in relation to the Commission 
proposal and bearing in mind the resulting increase 
in resources. From the economic angle, however, it 
does not hold water as it is an arbitrary figure. 
5. Although it is very difficult at the present time 
to calculate the financial consequences of enlarge­
ment — to which the Community is committed — it 
is virtually certain that the result will be an increase 
in expenditure. Unfortunately the information at the 
Committee's disposal is not as detailed as we would 
wish. 
6. Nonetheless the Committee feels that the Coun­
cil should take due account of the financial impact 
of its decisions. 
IV. Technicalities of the proposed increase in com­
munity resources 
1. Disregarding customs duties and other supple­
mentary resources, VAT has certain things in its 
favour as an own-resource of the Community: (a) it 
is already in operation, and (b) it has many advan­
tages from the point of view of practicability and 
efficacy. VAT reflects grosso modo each Member 
State's ability to contribute to the EEC and consti­
tutes an adequate basis for the financing of the 
Community budget. 
2. Acting in conjunction with the 33 % threshold, 
the proposal to gear VAT contributions to the level 
of agricultural production is designed to reduce the 
contribution of some Member States and increase 
that of others. 
It would also act as a counterbalance to any pro­
pensity to excessive agricultural spending. 
3. Increasing expenditure in other fields merely in 
order to re-establish equilibrium by reducing the 3. The introduction of a sectoral indicator of this 
kind could, of course, prove to be a questionable 
No C 358/38 Official Journal of the European Communities 31.12.83 
precedent in encouraging unjustified 'segmentation' 
of the economy. As matters stand, however, it must 
generally be considered to foster a sense of responsi­
bility conducive to greater realism in a sector which 
is commonly agreed to devour the lion's share of 
Community expenditure. 
It will not necessarily act as an effective brake. 
Member States with a high agricultural output will 
probably be prepared to shoulder the resulting 
increase in their contributions because of the ben­
efits they nonetheless stand to gain from the CAP. 
Consequently structural reforms could be pursued 
less energetically — and the 33 % target would be 
harder to attain. 
The Committee fears that the introduction of an 
agricultural indicator would hinder the passage of 
new regulations in sectors which are not yet covered 
by such rules (potatoes, alcohol, forestry). It must be 
remembered, however, that the indicator's impact 
on the agricultural output of regulated sectors would 
be offset by the manifold advantages of the CAP. 
It has also been argued that the agricultural indica­
tor would in some respects disadvantage the major 
agricultural countries, which are not necessarily 
among the richest. However, the other two proposed 
indicators would exercise a corrective influence. 
4. The two other indicators proposed by the Com­
mission, namely per capita gross domestic product 
and the share of each Member State in the Com­
munity's net operating surplus, can be defended 
because their use would make it possible, even more 
satisfactorily than the simple use of VAT, to take 
account of each Member State's ability to contribute 
to the Community's budget. The agricultural indica­
tor would then not play a disproportionate role in 
determining adjustments. 
However, the Committee fears that practical diffi­
culties would arise in connection with implementa­
tion and asks the Commission to investigate 
whether the methods used by the Member States for 
calculating per capita GDP are sufficiently compa­
rable to avoid distortions. 
The Commission could also consider whether, in the 
light of available data, the two non-agricultural indi­
cators could be refined further by incorporating a 
regional component paying particular attention to 
the importance of agriculture for the region or tak­ing account of the employment situation at national 
or regional level. 
5. The system of variable VAT rates, geared in 
particular to agricultural production, is really 
nothing more than a makeshift solution devised to 
end the present deadlock. 
Other arrangements with the same objective must 
therefore be explored without delay. If no alterna­
tive is found in time, variable rates will have to be 
applied, but on a purely temporary basis, i.e. as long 
as imbalances persist and better solutions have not 
been found. This is necessary to set the ball moving 
but adjustments must be made to keep the disad­
vantages to a minimum. 
6. In view of the damage likely to be inflicted on 
the Community if the present restrictions on 
resources are maintained, the Committee is in 
favour of stepping up the Community's own 
resources. The lack of accurate data on feasible cuts 
and the policies to be developed makes it hard to 
ascertain the scale of spending required, and hence 
what increase will be necessary. 
The proposal to raise the VAT ceiling from 1 to 
1,4 % is acceptable provided that (a) expenditure is 
tailored to needs and (b) stringent controls are 
applied to ensure that spending is both justified and 
effective. This ceiling is anyway unlikely to be 
attained for several years. It must also be remem­
bered that the increase from 1 to 1,4 % will have to 
be approved by the Member States' parliaments — a 
procedure which will require around two years. 
7. Given the procedure proposed by the Commis­
sion, the possibility of increasing the VAT contribu­
tion beyond 1,4% in steps of 0,4% raises no objec­
tions in principle. Obviously, that would have to 
depend on the overall situation at the time, which is 
difficult to forecast at the present juncture. 
8. The inclusion of ECSC customs duties in the 
Community's resources is acceptable provided that 
ECSC expenditure can be covered, should revenue 
from levies fall short of requirements. 
9. With regard to the 10% ceiling on Community 
receipts reimbursed to the Member States, it seems 
advisable to lower the upper limit. 
31. 12. 83 Official Journal of the European Communities No C 358/39 
10. Alternatives to the Commission proposals have 
been put forward during discussions. These include 
the possibility of levying a tax on the consumption 
of certain products or services. 
Generally speaking, the Committee feels that the 
composition and underlying principles of specific 
taxes, devised to fund specific sectors, should be 
examined on an individual basis. 
On the other hand, it feels that the introduction of 
these taxes for the purpose of increasing and diver­
sifying the Community's general budget is a funda­
mental issue that needs to be studied in depth. V. Conclusions 
The Committee stands by the viewpoints 
expounded above and supports an increase in the 
Community's own resources, to be accompanied by 
concurrent restructuring of the Community budget. 
The Committee has given its opinion on the basis of 
the Commission proposal of 6 May 1983. In the 
light of subsequent work on this matter and the 
delay before the Community can utilize new 
resources, it would stress that compulsory spending 
during the interim period must not be funded at the 
expense of new policies or the Social or Regional 
Funds. 
Done at Brussels, 26 October 1983. 
The Chairman 
of the Economic and Social Committee 
Francois CEYRAC 
APPENDIX 
to the opinion of the Economic and Social Committee 
Rejected amendement 
The following amendment, tabled in accordance with the Rules of Procedure, was rejected by the 
Committee during plenary session discussions 
Page 9, point 5 
Replace by the following: 
'Bearing in mind the comments made above and elsewhere, the system of variable VAT rates 
is unacceptable. The various instruments currently provided for in the arsenal of the com­
mon agricultural policy, including the method of production quotas at guaranteed prices, 
must be enlisted in a way that is satisfactory from both a quantitative and qualitative view­
point for purposes of solving the problem of overspending in connection with the CAP.' 
Reasons 
The system of rates varying according to national agricultural production criteria is unacceptable 
because it would re-nationalize production in certain respects, thereby undermining the unity of 
the market and Community solidarity. 
Voting: 
For: 8, against: 74, abstentions: 29