A4-0105/99

Resolution on the need to modify and reform the European Union's own resources system

The European Parliament,

- having regard to Rule 148 of its Rules of Procedure,

- having regard to the Commission report of 7 October 1998: Financing the European Union - Commission Report on the Operation of the Own Resources System (COM(98)0560 - C4-0579/98),

- having regard to the Treaty establishing the European Community, and in particular Article 201 (future Article 269) thereof, and the Treaty establishing the European Atomic Energy Community, and in particular Article 173 thereof,

- having regard to Council Decision 70/243/ECSC, Euratom of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own resources ((OJ L 94, 28.4.1970, p. 19.)), and in particular Article 4 thereof stipulating that 'from 1 January 1975 the budget of the Communities shall, irrespective of other revenue, be financed entirely from the Communities' own resources',

- having regard to its resolutions of 21 April 1994 on a new system of own resources for the European Union ((OJ C 128, 9.5.1994, p. 363.)) and 22 November 1990 on the future financing of the European Community ((OJ C 324, 24.12.1990, p. 243.)),

- having regard to its resolution of 4 December 1997 on the communication from the Commission on Agenda 2000: the 2000-2006 financial framework for the Union and the future financing system (COM(97)2000 - C4-0372/97) ((OJ C 388, 22.12.1997, p. 31.)),

- having regard to Council Decision 94/728/EC, Euratom of 31 October 1994 on the European Communities' system of own resources ((OJ L 293, 12.11.1994, p. 9.)),

- having regard to the study of September 1997 on own resources carried out for its Directorate-General for Research,

- having regard to Special Report No 6/98 of the Court of Auditors concerning the Court's assessment of the European Union's system of resources based on VAT and GNP ((OJ C 241, 31.7.1998, p. 58.)),

- having regard to Special Report No 9/98 of the Court of Auditors on the protection of the financial interests of the European Union as regards VAT on intra-Community trade ((OJ C 356, 20.11.1998, p. 1.)),

- having regard to the study of October 1998 on own-resources reform and net positions in the EU budget carried out for its Directorate-General for Research,

- having regard to the report of the Committee on Budgets and the opinions of the Committee on External Economic Relations, the Committee on Institutional Affairs and the Committee on Budgetary Control (A4-0105/99),

A. whereas a system of resources to finance the public administration and monitoring the use to which they are put are two of the central components of any representative democracy,

B. whereas the system of Community own resources is a basic feature of the EU's political integration process,

C. whereas the tasks of the European Union should be financed by means of own resources, and whereas the principle of 'juste retour' in the financing of tasks from the budget is an unsuitable criterion which is inconsistent with the principles of the Treaty and was rejected by Parliament in its abovementioned resolution of 4 December 1997; whereas the shaping of the budget on the revenue and expenditure side should comply with the principles of justice and solidarity, as required by the Treaty; whereas these principles have to be respected, in particular in view of the enlargement process,

D. whereas Community revenue from own resources has hitherto sufficed to finance the European Union's activities and policies,

E. whereas the system of own resources has been modified on several occasions, leading to the introduction of different capping limits and calculation factors, some of which, though taking greater account of the Member States' economic performance, have made the system less transparent and comprehensible and changed the original objectives,

F. whereas Parliament has always called for Community own resources to be clear and comprehensible to European taxpayers, and whereas, for reasons of public accountability, Parliament must be involved in the decision-making process relating to Community own resources,

G. whereas the structure of the financing of the European budget is strongly marked by the legacy of the past and has partly emerged as answers have been found to specific problems, for which reason it has evolved to meet requirements and thus complies to some extent with the logic of European integration, but only on rare occasions has it pursued any general European strategy,

H. whereas, with the expansion of the common policies and the admission of new members, the EU's budget will face new challenges,

I. whereas the political, economic, financial and budgetary advantages which the individual Member States derive from membership of the European Union and from participating in common policies significantly qualify the net balances cited by some Member States to justify their call for an additional correction mechanism and calculated by these countries,

J. whereas some Member States are becoming increasingly critical of the sharing of the burden of financing the budget and are demanding, inter alia, the application of a correction mechanism similar to the one which has applied to the United Kingdom since 1984, and whereas other Member States believe that greater account should be taken of per capita income in the calculation of the Member States' shares in the financing of the budget and are therefore proposing that these shares should be calculated in accordance with a progression model,

K. whereas traditional own resources are steadily waning in importance as a proportion of revenue, and VAT-based own resources, like GNP-based own resources, have characteristics which make them liable to be confused with national contributions, for which reason there is an increasinglyurgent need for new own resources to be created that safeguard the Community's financial autonomy,

L. whereas, in the process of shaping the own resources system in future, account must be taken of the principles, set out in Articles 2 and 3 of the EC Treaty, underlying the Community's tasks and activities: economic and social cohesion and solidarity among Member States, just as much as promotion of growth, employment and quality of life by implementing common policies,

M. whereas the present system of own resources is inadequate as regards the criteria of financial autonomy, transparency, ascribability and readability from the point of view of the general public, and whereas efforts must be made to fulfil these criteria through reform of the own resources system,

N. whereas the introduction of new own resources that do not increase the burden on the European taxpayer can make the revenue system more transparent, more straightforward and more rational, increase the Union's financial independence and establish a direct link between the European Union and its citizens,

1. Believes that, in principle, the European Union's budget should eventually be established in accordance with the financial principles of the systematic sequence of the definition of tasks, the planning of expenditure, the securing of revenue and evaluation and that, when the tasks are defined, a distinction should be made between regulatory and fiscal tasks; believes that it is in the European citizen's greatest interest that revenues raised at whatever level - whether European, national, regional or local - should be spent effectively; considers that duplication of tasks between the European and national authorities should be avoided whenever possible;

2. Believes that the revenue system should as a matter of principle be rid of exemptions and special arrangements, that existing arrangements must be discontinued, that all the Member States must participate in the financing of the budget in accordance with the same principles, and that offsetting, in accordance with the Treaty, of disparities in economic development must be ensured not on the revenue side, but, rather, in accordance with systematic budgetary principles, on the expenditure side;

3. Points out that the Commission is the guardian of the Treaties and is responsible for defining the Community interest; insists that the Commission be mindful of those objectives when it drafts its proposals and not yield to the interests of certain Member States;

4. Condemns the so-called 'juste retour' theory, which is contrary to the indivisible nature of the financial and non-financial rights, benefits and obligations deriving from Union membership and from the principle of solidarity between the Member States and the principles of the four freedoms; regrets the fact that the Commission has abandoned its practice of providing estimates of the non-budgetary economic benefits which the Member States derive from their participation in economic and monetary union;

5. Believes that the lack of democratic oversight and codetermination by the European Parliament argues for changes to the system of own resources, and regrets that for the time being the differing positions of the Member States stand in the way of reforms; expects, however, given the importance of the issue for further integration, a decisive convergence of the various views;

6. Is therefore of the opinion that the system of own resources should be reformed in stages in tandem with deepening integration, the first requirement being to defuse the differences as regards financial burden-sharing so as to create the necessary scope for more radical reforms;

7. Calls for a thoroughgoing debate, looking ahead to the enlargement-related revision of the Treaties, on the necessary reform of Article 201 (future Article 269) of the EC Treaty, with a view to making the own resources system both more flexible and more democratic;

Prospective goals of own resources reform

8. Believes that the introduction of economic and monetary union and the associated increase in cooperation under the fiscal and financial policies will mark a new stage in the depth and quality of integration, which will also make a new, global view of the Union's budget necessary; believes that the budget should be so structured that the Union may play its rightful role as a global political and economic actor of growing importance; calls for the European Parliament to be given in this context full budgetary powers, which are not confined to the expenditure side, and to only some expenditure, but embrace all areas of expenditure and revenue;

9. Believes that, if the EU's financial independence is to be ensured, its tasks are to be financed and it is to be able to develop in the longer term, the budget should be based on new own revenue not constituting Member State contributions that must not lead to an increase in the total burden on the European taxpayer; emphasises that increasing the financial endowment also means giving the Union clear responsibility for the relevant fiscal legislation, including appropriate power to raise revenue;

10. Believes that revenue which goes directly to the Union is of direct relevance to the citizens of Europe, that it must have their approval as far as possible and that it should be logically related to European integration and European tasks; emphasises that such revenue must satisfy the criteria of simplicity and comprehensibility, fairness, transparency and democratic controllability;

11. Points out that the European Parliament has commissioned two studies on the choice of suitable new sources of tax and revenue, in which the advantages and disadvantages of different forms of revenue are considered; points out that, as no kind of tax has proved to be optimal in this context, the Union's future financial autonomy must be ensured by a combination of different forms of new revenue, with the greatest possible account taken of the criteria referred to;

12. Believes that the revenue system must be rid of extraneous tasks, such as compensation for differences in economic performance and adjustment for differences in payments to the Member States, and that these tasks should be performed with more suitable instruments, such as the structural and cohesion policies;

Identical financing arrangements for all Member States

13. Points out that the existing correction mechanism on the revenue side, which has hitherto been applied only to the United Kingdom, was introduced at a time when agriculture accounted for over 70% of the Community's expenditure to ease the burden on countries whose agricultural industry was small in macroeconomic terms; emphasises that a reduction in individual Member States' shares of the financing of such aspects as structural policy, pre-accession measures and internal policies is inconsistent with the system and cannot be justified in any way;

14. Calls on the Commission, with a view to fair sharing of the burden of financing the budget among the Member States, to submit a proposal for a gradual reduction of the correction mechanism and to ensure that the present arrangements have been phased out by the time the first new members accede;

15. Emphasises once again its call for the integration of the EDF into the EU budget;

Elements of the reform

16. Points out that traditional own resources are steadily waning in importance as a means of financing the budget and that this trend will become more marked as a result of EU enlargement and the progressive liberalisation of trade (including trade in agricultural products);

17. Points out that collecting these resources in the Member States entails an enormous administrative effort for the Union, with serious cases of irregularity and fraud also occurring; calls on the Commission to exercise to the full its responsibilities in the area of the protection of the Community's finances, and in particular in the sphere of the traditional own resource 'customs duties', and to take energetic steps to encourage the Member States to introduce credible arrangements for assessing the impact of fraud and the effectiveness of and the results achieved by audit measures; believes that thought should be given to the introduction of a system under which the Member States would be required to collect traditional own resources more efficiently;

18. Points out, furthermore, that traditional own resources are the Union's only form of own revenue that cannot be confused with contributions from the Member States; calls on the Commission, taking all arguments into consideration, including the 'gateway effects¨, to draw up a proposal for the handling of traditional own resources which, on the one hand, takes account of their importance for the European budget, the European economy and the functioning of the internal market and, on the other hand, scrutinises the cost-benefit ratio very carefully;

19. Points out that VAT-based own resources as currently structured facilitate confusion with contributions from the Member States, as the Court of Auditors and the Commission have stated in their recent opinions on own resources; also points out that the models used to calculate these resources and the capping limits and common calculation factors applicable in this context have given rise to a system which is extremely complex and lacking in transparency;

20. Gives its initial endorsement, therefore, to the proposal that VAT-based and GNP-based own resources should be combined in a transparent, simple source of own resources the calculation of which is comprehensible, which is based on GNP and on the basis of which a fundamental reform of the own resources system and the introduction of new forms of own revenue in place of the present third and fourth sources of revenue can be addressed;

21. Points out that imbalances due to technical factors have arisen as a result of an obsolete method being used to calculate GNP as an indicator of economic performance; calls on the Commission, therefore, to ensure the elimination of technical causes of imbalances by proposing an early technical revision of the own resources decision and to have GNP calculated by the most up-to-date method;

22. Believes that public revenue or profits from European bodies, such as ESCB profits, should accrue to the European budget as own revenue;

23. Calls for any agreement reached by the Member States on certain types of tax to provide for at least some of the yield to accrue to the Union budget as own revenue, since these taxes will then be of a primarily European nature;

24. Emphasises that such new revenue for the European budget should not be additional, but should replace existing revenue;

25. Urges the Council to approve such a reform in agreement with Parliament so that it can be brought into force before the next round of enlargement;

26. Believes that the gradual reform of the system of own resources should be considered during the negotiations on the interinstitutional agreement on the financial perspective 2000-2006;

27. Instructs its President to forward this resolution to the Commission, the Council and the Court of Auditors.