EU Commission proposes new sources of revenue for the EU to pay for the recovery package – Emissions auctioning revenues, carbon duties and digital tax as tools

European the commission is proposing new sources of revenue for the EU to fund a significant part of the EU’s corona recovery package.

The Commission is proposing three new sources of revenue for the EU: auctioning revenues, carbon duties and a digital tax. They are estimated to bring around € 17 billion a year to the EU.

Predominant the source of revenue would be auctioning revenues. At present, the revenue goes to the Member States, but the Commission proposes that in future a quarter of the revenue be channeled directly into the EU budget.

Due to the increase in the price of emission rights, auction revenues have become a significant source of revenue, and the Finnish state, for example, will receive approximately EUR 200 million in auction revenues this year. The Commission estimates that around € 12 billion a year could be raised from the EU budget.

The Commission also suggests that much of the revenue from any carbon tariffs would go to the EU. Carbon tariffs are intended to target high-emission products imported into the EU from countries with lighter climate regulation. A decision on the imposition of duties has not yet been taken.

The Commission would like 75% of customs revenue from coal to go directly to the EU budget. This would mean an estimated half a billion euros in annual revenue.

Third the source of income would be a tax on digital waste.

The taxation of Google, Amazon and other digital giants is currently being reformed under the auspices of the OECD. The intention is that in the future, the tax revenue paid by companies will be more evenly distributed in all the countries in which the companies operate. At present, companies are able to organize their operations so that they record their profits in low-tax countries.

According to the Commission’s proposal, EU countries would direct 15% of the new digital tax they receive in the future to the EU budget. This is estimated to bring between € 2.5 billion and € 4 billion to the EU each year.

Commissioner for Budgets Johannes Hahn describes the Commission’s proposal as historic, as the proposal would bring significant new sources of revenue to the Union. The EU budget is 70% funded by membership fees.

This is not a completely new issue, as the EU already receives revenue in the form of, for example, customs duties, VAT and plastic taxes.

However, the proposal is fundamentally significant and is likely to provoke resentment in some Member States. Hahn believes member states are ready to accept the proposal to fund the increased EU spending decided in the midst of the interest rate crisis.

“If we can’t agree on these proposals, member states will have to pay the recovery package subsidies in higher membership fees. That is why I think it is in the interests of all member states to agree on new own resources, ”he says.

According to Hahn, the three sources of revenue now presented cover about two-thirds of the financing needs of the recovery package. The Commission will present another proposal on new sources of revenue at a later stage. One possible source of revenue could be a transaction tax on financial markets.