“Historically, parliaments have always approved new taxes. The American Revolution started with the slogan ‘no taxation without representation’. Currently, we have EU representation without taxation – the European Parliament represents citizens but doesn’t have a fiscal capacity, which means that while it adopts policies, it cannot raise revenues to fund them”, comments Antonio Argenziano, President of JEF Europe.
Today, the European Commission has unveiled its proposal for three new revenue sources for the EU budget independent from national contributions, so-called “own resources”. The first is based on revenues from emissions trading (ETS), the second draws on the resources generated by the proposed EU carbon border adjustment mechanism, and the third is based on the share of residual profits from multinational companies that will be re-allocated to EU Member States under the recent OECD/G20 agreement on a re-allocation of taxing rights (“Pillar One”). These new own resources, estimated to generate €17 billion a year from 2026, are necessary for the EU to cover the costs of the €800 billion economic recovery and transformation package Next Generation EU (NGEU). The new own resources should also finance the Social Climate Fund.
Now this proposal has to pass first through the – formal or informal – veto mechanism of the Council and then the ratification by every member state. This process will take time and the risk of a watered-down compromise is high. The global challenges we are facing, such as climate and digital transitions and social issues, are urgent and need ambitious answers. That’s why complementing the Economic and Monetary Union with the missing fiscal pillar is a necessary next step in European integration. Certainly, it will finally allow the EU to fund its own policies independently from national governments and provide the necessary European public goods to its citizens. In order to ensure a democratic oversight, the European Parliament should be fully involved in introducing, developing and monitoring these fiscal instruments without being dependent on cumbersome national ratification processes.
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