• EU should boost research programmes, support to young people and small firms
• EU long-term budget should fund new priorities as well as modern, sustainable farming and development of Europe’s regions
• Partly replace member states’ GNI-based contributions with new revenue resources

The European Parliament adopted two resolutions on the expenditure and revenue sides of the next multi-annual financial framework (MFF), to apply from 2021.

The next MFF must provide the means to tackle new challenges

Parliament wants the EU budget to match political priorities and address some of the new challenges facing all member states, be they migration, defence, security or climate change. They consider that the current limit on EU expenditure needs to be raised from 1% to 1.3% of EU GNI, in order to be able to fund these new priority areas without sacrificing Europe’s regions or farming communities.

Key proposals include boosting research programmes, Erasmus+, the Youth Employment Initiative and support for SMEs as well as infrastructure investment through the Connecting Europe Facility (CEF).

MEPs warn that “no agreement can be concluded on the MFF without corresponding headway being made on own resources” – i.e. the revenue side of the EU Budget. Expenditure and revenue should thus be treated as a single package.

Reduce member states’ direct contributions

The resolution builds on the Report of the High Level Group on Own Resources, and calls for strengthening the existing own resources and progressively introducing new own resources. These could be based on a revised VAT resource, a share of corporate tax revenue, a financial transaction tax, a digital sector tax or environmental taxes.

The new own resources should:

• bring about a substantial reduction (aiming at 40%) in the proportion of GNI-based direct contributions, thus creating savings for member state budgets, while at the same time doing away with the logic of “fair return” leading to a “zero-sum game” between net payers and beneficiaries;

• abolish all rebates and corrections which benefit only some member states;

• cover the ‘Brexit gap’ without increasing the overall fiscal burden for EU taxpayers.

The resolution by co-rapporteurs Jan Olbrycht (EPP, PL) and Isabelle Thomas (S&D, FR) for the post-2020 EU long-term budget was adopted by 458 votes against 177, with 62 abstentions.

The resolution by co-rapporteurs Gérard Deprez (ALDE, BE) and Janusz Lewandowski (EPP, PL) on the reform of the EU’s system of own resources was adopted by 442 votes against 166, with 88 abstentions.

Next steps

The two resolutions provide Parliament’s input to the EU Commission’s legislative proposals on these matters due in May 2018. The adoption of a new MFF Regulation requires Parliament’s consent.

The reports call for discussions to be launched without delay between the three institutions in order to try to reach an agreement before the European elections.

Background

• Over 94% of the EU budget goes to citizens, regions, cities, farmers and businesses. The EU’s administrative expenses account for under 6% of the total. (Source: European Commission)
• A survey shows that Europeans expect solutions from the EU. Most respondents think that Europe should do more to tackle a wide range of issues, from security, to migration and unemployment (source: Eurobarometer).

More

More information is available in the MFF Q&A

Report of the High Level Group on Own Resources

Article: EU’s long-term budget – Parliament sets out its priorities