ARCHIVES HISTORIQUES 
DE LA COMMISSION 
 
 
 
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COM (84) 140 
 
 
 
Vol. 1984/00 53 
  
 
Disclaimer  
Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the open ing to the public of the historical archives of the European Econom ic 
Communit y and the European Atom ic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this file is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 19 83 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 vom 2 7.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5  
der genannten Verordnung freigegeben.  
COMMISSION OF THE EUROPEAN COMMUNITIES
COM ( 8 4 ) 1 4 0  f i n a l
B r u s s e l s ,  5 M a rc h  1 9 8 4
FUTURE F IN A N C IN G  OF THE COMMUNITY
(C o m m u n ic a tio n  fr o m  t h e  C o m m is s io n  t o  t h e  C o u n c il)
COM( 8 4 )  1 4 0  f i n a l

1
The Commission proposed in May 1983 that under the 1970  
Decision on own resources a new Community decision-making procedure  
should be instituted for setting the rate of call-up applicable to  
the basis of assessment for VAT.
The p ro c e d u re  w o u ld  b e  o p e ra te d  f o r  th e  f i r s t  tim e  b e fo r e  th e  s e t t in g  o f  a VAT c a ll- c p  
ra te a b o v e  1 .4  %.
The Commission's proposal received the support of the  
European Parliament, with the qualification that the matter  
must be dealt with in the framework of the powers pertaining to  
national ratification procedures. From the Council discussions it  
em erged t h a t  th e  o v e rw h e lm in g  m a j o r i t y  o f th e  M e m b e r S ta te s  w is h e d  t o  
continue the principle of a ceiling rate laid down in the 1970  
Decision and the requirement that any increase in the ceiling r a te  
is  t o  be agreed by the Member States unanimously and ratified by  
the national Parliaments.
This being so, the Commission would now make the point that  
the Community is consequently in the same position as at the  
tim e  o f th e  1970 D e c is io n  ;  the Community has accordingly to  
set a new ceiling on the increase of VAT own resources.
The 1 9 7 0  Decision gave the Community f i n a n c i a l  s e c u r i t y  f o r  
thirteen years. A decision of like scope is called for now,  
taking account of a number of considerations that did not apply  
when the 1 9 7 0  Decision was taken.
1. F u tu re  d e v e lo p m e n t o f th e  C om m unity B u d g e t  in  th e  c o n te x t_ o _ f 
b u d g e t d i s c i p l i n e
Raising the own resources c e i l i n g  is  t h i s  tim e  p a r t  and 
parcel of a s e t o f a rra n g e m e n ts  p ro p o s e d  by th e  
Commission for containing farm spending and establishing  
strict budget discipline generally.
Whereas in 1981  the VAT call-up rate was still the same as in  
1 9 7 9 , viz. O .7 8 , in 1982  it suddenly moved to over 0 . 9 ·  Since 
1983  the Community Budget has been up against the own resource  
ceiling, as the combined result of farm spending and offset  
payments to correct the imbalances in the distribution of  
budget charges. (Had it not been for the offset payments the  
1983  call-up rate would have been 0 . 8 7 5 · )

2
The strict budget management guaranteed by the decisions which the 
Council takes on the basis of the Commission’s proposals will  
ensure that the new resources are of a permanent nature by enabling 
the growth of the Community Budget to be kept within bounds.
At the same time the European Council's decision on the future financing of the Com­
munity must show a dynamic approach and offer a real prospect of further development in 
the medium term.
For there are cases whefe joint action by the Member States is more effective and economical than 
action by the Member States is more effective and economical than  
piecemeal national measures. With all due respect for the  
constraints on public spending throughout the Community, the  
financing system of the Community must therefore be given  
sufficient flexibility to take on further developments in line  
with these economy requirements, particularly as they mean in practice 
that the demands on the national Budgets are less.
2. Enlargement
The raising of the own-resources ceiling must also enable the- 
Community Budget to cover the financial implications of Spanish  
and Portuguese accession.
The annual profile of the budgetary effects of enlargement cannot 
be determined at the present stage of the negot iations with Spain 
and Portugal. To start with the increase in Community expenditure  
will stem mainly from higher structural expenditure for the benefit  
of the acceding countries and the Mediterranean regions of the  
Community; later on enlargement might involve a net increase in the  
Community Budget of 0.1-0.2$ of VAT.
3· Rate of growth of own resources
Prudence demands that we should not bank on a real growth rate in 
Community GDP of more than 2.5 % p.a. over the coming years.
The average annual growth in the VAT basis of assessment  
should not exceed that in GDP. Moreover, the trend in
movement of the other revenues is ^luggish: in fact in real terms  
their value has actually declined.
The traditional own resources (agricultural levies, sugar and  
isoglucose levies, customs duties) rose in face value by an  
average 6.8$ p.a. in the period 1978-83,  while during the same  
period GDP implied prices rose by 8.9% p.a. The real value of  
the traditional own resources thus fell by an average 1.9$ p.a.  
during those five years.

3
I n  1 9 7 8  c u s to m s  d u t i e s  a n d  t h e  o t h e r  common p o l i c y - r e l a t e d  r e v e n u e s  
a c c o u n te d  f o r  45% o f  a v a i l a b l e  own r e s o u r c e s ,  b u t  i n  1 9 8 4  t h e  f i g u r e  i s  
o n l y  42% .
This trend can be expected to continue, and indeed to gather  
pace, in the years ahead. Most customs duties are bound in GATT  
and come under a dismantling schedule which could be speeded up  
in accordance with the progress of world e f f o r t s  t o  l i b e r a l i z e  
international trade.
As for thé agricultural levies, they are a particularly  
erratic source of finance, whose yield will be adversely affected  
by the implementation of the Commission's proposed CAP reforms.
Care must be taken therefore not to equate an in c r e a s e  i n  t h e  
Community Budget with an in cre a se  in  th e  VAT revenues re q u ire d . "Tie r e la tiv e  
diminution in the other resources automatically involves, for  
a given real increase in the Budget, a faster increase in the  
VAT revenues c a l l e d  u p . Thus it has been estimated that tariff  
dismantling and the fall in the agricultural levies consequent on  
CAP reform could mean, at a time-scale of 10-15 years, a 0.2# 
increase in the VAT call-up rate m e r e ly  to m a i n t a i n  t h e  r e a l  v a lu e  o f  
available own resources.
k. Time needed
To gain the Council's agreement to a proposal for going above  
the own-resources ceiling, and after that to obtain ratification by the national 
Parliaments (twelve of them after enlargement), will take at least  
two years. This cuts two years off the period during which the higher_  
own resources ceiling will allow trouble-free Community budgeting.
Moreover the credibility of the Community system would suffer 
severely if the national Parliaments had to be constantly applied to  
in order to obtain the wherewithal to go ahead with the common 
venture.
In the two financial years that will elapse between the 
exhaustion of own resources within the 1# ceiling and the advent of  
the new resources Budget growth will be completely
straitjacketed. Hence there is bound to be an accumulation of  
commitments and deferments of expenditure which will have to be  
honoured later. This is inevitable even if the Commission's  
proposals for the reform of the CAP are adopted in full in  
principle by the Brussels European Council in March,

k
for even then it would still take time to turn the decisions-in-  
principle into operational regulations, and time again for the  
regulations to have their full budgetary impact. So it could be  
that the Community Budget will have to be temporarily increased  
for so long as it takes to implement the arrangements for properly containing 
farm spending. This factor, which may be discounted in a long-term  
context, would become very relevant indeed if the new own-resources  
ceiling were not consonant with the long-term context and in fact  
only afforded the Community a breathing-space.
5. In view of the foregoing the Commission is proposing that the
Council today take a decision of like importance to that of  
1970, raising by one point the maximum rate determining the 
revenue from value-added tax which may be assigned to the Community.
The Commission is of the opinion that this increase of the  
ceiling rate from 1 to 2% of the basis of assessment for VAT  
would give the Community secure financing for long enough to  
cover the whole transitional period of its enlargement to include ·
Spain and Portugal.
In asking the European Council to give the Community this  
financial security - monitored in accordance’with the budget discip l ine 
rules - it is thus asking the Member States to have the same degree of 
confidence in Europe as they did in 1970.
It is not askinn them to accept the principle of automatic, regular 
increases in Community revenue-generation.
By deciding to make available to the Community a certain range of 
potential resources the Member States will not be authorizing their de­
ployment; the actual expenditure and revenue of the Community will be 
determined through the annual Budget procedure, strictly within the frame­
work of the rules on budget discipline proposed by the Commission.
During that period it is also necessary to allow for the  
effects, at the appropriate time, of budgetizing the EOF.

Annex
Developm ent of the C om m unity Budget and funding thereof  
(som e significant points)
1 9 7 8 -8 3
T o t a l  e x p e n d it u r e
As a  %  o f  C o m m u n ity  G DP, 1 9 7 8  0 .7 9 %
1 9 8 3  0 .9 3 %
As a %  o f  n a t i o n a l  B u d g e t s ,  1 9 7 8  2 .6 %
1983R e a l a n n u a l a v e r a g e  g r o w t h  r a t e  3 , 0  *
VAT
R a te  o f  r e a l,  a n n u a l a v e r a g e  g r o w th  i n  b a s is
o f  a s s e s s m e n t f o r  VAT 1 9 7 9 -8 3  1 .9 %
R a te  o f  r«?al a n n u a l a v e r a g e  g r o w th  i n  VAT
r e v e n u e s  c o l l e c t e d  1 9 7 9 - 8 3  8 .9 %
VAT c a l l - u p  r a t e  1 9 7 9  0 .7 7 8 1
VAT c a l l - u p  r a t e  1 9 8 3  0 .9 9 8 0
O t h e r  r e s o u r c e s
R a te  o f  r e a l  a n n u a l a v e r a g e  g r o w th  i n
a g r i c u l t u r a l  r e s o u r c e s  - 8 .0 %
R a te  o f  r e a l  a n n u a l a v e r a g e  g r o w th  i n
t o t a l  c u s to m s  d u t i e s  + 0 .8 %
R a te  o f  r e a l  a n n u a l a v e r a g e  g r o w th  i n
t o t a l  o t h e r  r e s o u r c e s  - 1 .9 %