Opinion of the Economic and Social Committee on the 'Proposal for a Council Decision on the system of the European Union's own resources'
Date: 1999-10-20
Institutions: European Economic and Social Committee
Subjects: Member States' contribution, VAT, administrative expenditure (EU), financing method, general budget (EU), own resources

C 368/16

EN

Official Journal of the European Communities

20.12.1999

Opinion of the Economic and Social Committee on the ‘Proposal for a Council Decision on the
system of the European Union’s own resources’

(1999/C 368/06)

On 3 August 1999 the Council decided to consult the Economic and Social Committee, under Article 262
of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 29 September
1999. The rapporteur was Mr Cal.

At its 367th plenary session of 20 and 21 October 1999 (meeting of 20 October), the Economic and
Social Committee adopted the following opinion by 109 votes to one, with two abstentions.

The Commission proposal, which was issued in July
1.
1999, is pursuant to the decisions taken at the Berlin European
Council on 24 and 25 March 1999 regarding the financing of
the European Union for the period 2000-2006.

The Council’s main decisions regarding own resources

1.1.
were as follows:

other measures which were duly adopted by the European
Council and which now feature in the proposed Council
decision. These latter measures include wider use of the GNP
resource, a reduction in the maximum rate of call of the VAT
resource, an increase in the percentage of revenue retained as
collection costs, and consideration of the costs of enlargement
in the rebate granted to the UK.

— reduction of the maximum rate of call of the VAT resource
from the current 1 % to 0,75 % in 2002 and 2003, and to
0,5 % from 2004 onwards;

— increase in the percentage of ‘traditional own resources’
retained by the Member States as collection costs (from
10 % to 25 %);

2.1.
As it is not yet possible realistically to determine the
costs and timescales of enlargement, the Opinion on Financing
the European Union took the view that the whole issue of own
resources, including the budgetary imbalances affecting some
Member States, would have to be reviewed before 2006. The
Committee therefore welcomes the European Council’s request
to the Commission to review the operation of the own
resources system.

— technical adjustments to the correction of budgetary
imbalances in favour of the United Kingdom (to take
account of the results of the Berlin European Council
decisions and the future costs of enlargement);

— change in the financing of the UK abatement to reduce the
financing share of Austria, Germany, the Netherlands and
Sweden to 25 % of the normal share;

— invitation to the Commission to review the operation of
the own resources system by 1 January 2006. The review
is to cover the effects of enlargement, the rebate granted to
the UK and the rebate granted to the four Member States
mentioned above in the financing of the UK rebate, and
the question of creating new autonomous own resources
for the EU.

2.
The Committee considered these issues in an own-
initiative opinion of 24 March 1999 on Financing the Euro-
pean Union (1), which it drew up for the European Council of
the same date. The opinion acknowledged the difficulty of
adopting some of the proposals under discussion, such as the
creation of new own resources, and endorsed some of the

2.2.
The need for such a review is clear from an analysis of
the current budgetary imbalances and from the projected costs
of enlargement as they emerge from the various budget
headings. The costs for the EU budget have been ‘seriously
underestimated’.

2.3.
However, the basic issue raised in the earlier opinion is
more far-reaching. Ad hoc positive measures are not enough
transparent, cost-effective and
to guarantee an ‘equitable,
simple’ own resources system. From 2005/2006 — the date
of
the first accessions — the new situation will require
the introduction of a ‘general regulating mechanism for
establishing a framework which takes account of the future
system of own resources. Such a mechanism would establish a
direct link between national prosperity (expressed in terms of
per capita GNP) and the budgetary balances of each Member
State. The purpose should be to safeguard the overall level of
own resources for enabling the European Union to maintain
and extend its role.’

(1) OJ C 138, 18.5.1999

‘The curve which represents the graphical expression
2.3.1.
of this mechanism could not exceed the limits on budgetary
balances’.

20.12.1999

EN

Official Journal of the European Communities

C 368/17

‘The direct relationship between the two variables should
not be expressed by a line but by a shaded area around that
line so that the correction mechanism comes into play when
the net situation in a Member State falls outside the shaded
area and deviates considerably from the net situation in the
other Member States with the same level of prosperity. The
relationship between budget imbalance, measured in relation
to per capita GNP and operational budgetary balances
requires a formula which allows for year to year variations in
budget contributions. Conceptually, the agreed mechanisms
should envisage a margin of variation which would be
acceptable when averaged over a period longer than one
year. The scale of this margin should be sufficient to enable
a better balance to be struck between the stability and
reliability of the level of revenue and the corrections to be
made to budgetary balances when they fall outside the

accepted degree of variation. It will thus be possible to avoid
generalised corrections every year’.

2.4.
The Committee considers that the report reviewing the
operation of the own resources system and, in particular, the
effects of enlargement on the financing of the budget (Article 9
of the proposed Council Decision), which the Commission has
to submit by 1 January 2006, has to be preceded by a
wide-ranging debate in all the institutions and in the Member
States about the financial autonomy of the European Union,
the declining share of traditional own resources, and the
availability of ample own resources to maintain and extend
the role of the European Union. This wide-ranging debate will
make it possible to obtain a broad consensus, which in turn
will make it easier for the European Commission to present
concrete proposals.

Brussels, 20 October 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI