WRITTEN QUESTION E-2651/98

by Friedhelm Frischenschlager (ELDR) to the Commission

(1 September 1998)

Subject: Financing of the EU - EU own resources - net contributors

How does the Commission intend to ensure, in the existing circumstances, that Germany's contributions will be reduced, as called for by the Finance Minister, Mr Waigel, that Austria's contributions will at least not be increased, as called for by the Finance Minister, Mr Edlinger, that the economic disparities between the present Member States will be further reduced, as called for by the Spanish Prime Minister, Mr Aznar, and that the enlargement of the European Union will be financed without the upper limit on contributions of 1,27 % of GDP being breached?

Have actual proposals or demands already been communicated to the Commission by the Member States, particularly the net contributors, in connection with the debate about net contributors, and what do they look like?

Will the Commission propose the abolition of the British rebate, which appears unjustified, or will it propose similar mechanisms for the other net contributors, instead?

Does the Commission intend to suggest new forms of financing for the European Union, if only as options or ideas for the future, in the proposal that it is to present in October? Has the Commission considered, or is it considering, e.g. the possibility of an EU income tax along the lines of the US federal income tax which, if it were offset by a corresponding reduction in national income taxes, would bring the major advantages of having a revenue-neutral or tax-reducing effect, being an efficient means of ensuring that higher earners, who will as a general rule benefit more from EMU, make a larger contribution to the EU budget, making non-transparent payments and transfers between the EU budget and national budgets superfluous, and bringing the European Union closer to European citizens, thereby making it more accountable?

Answer given by Mr Liikanen on behalf of the Commission

(1 December 1998)

The questions raised by the Honourable Member are addressed in detail in the Commission report(1) on the operation of the own resources system adopted on 7 October 1998, as mandated by Article 10 of the 1994 own resources decision.

The report reiterates the Commission's position that there is no simple measure that can account for all the net benefits accruing to the Member States from membership of the Community.

Austria, Netherlands and Sweden announced their support for the correction mechanism proposed by Germany as a means to reduce budgetary imbalances and see themselves as candidates for a correction of their budgetary imbalances. They favour the transformation of the present mechanism applying to the United Kingdom into a capping model applying to all Member States in a non-discriminatory manner.

Should there be political agreement that budgetary imbalances must be redressed, it would be possible to choose between three possible options, i.e., a simplification of the system of financing, an intervention on the expenditure side of the budget, and an intervention on the balances side of the account. The report does not favour one or the other option, but when an orientation emerges in the Council for a particular option, the Commission will make detailed proposals. Concerning the British rebate the report notes that it could be reduced or even phased out, especially as its justification will declines when enlargement takes place.

The report devotes considerable attention to the last issue the Honourable Member raises, concerning the introduction of new own resources, and it stresses that, although there are various possibilities, at present it is unlikely that a new own resource will emerge. Nevertheless, if there was the political will to do so, a modulated value added tax resource, as advocated by the 1994 Parliament Langes report, offers the most promising prospect.

(1) available on the World Wide Web in the following site: http://europea.eu.int/comm/dg19/index_j.htm, where J=EN for English, J=FR for French, J=D for German etc.