New EU revenue based on the Emissions Trading System, the Carbon Border Adjustment Mechanism, and on corporate profits
Funds urgently needed to repay debts from Next Generation EU recovery fund borrowing
New EU revenue agreed in legally binding roadmap from 2020
On Thursday, Parliament paved the way for introducing the next generation of “own resources”, sources of revenue for the EU budget.
With 399 votes in favour, 138 against and 61 abstentions, Parliament has taken an important step towards implementing an amendment to the law governing the EU’s revenue, the so-called “Own Resources Decision” (ORD). This amendment, once adopted by Council and ratified by all member states, will introduce three new sources of income: revenue from emissions trading (ETS); the resources generated by the proposed EU carbon border adjustment mechanism (CBAM); and a temporary statistical own resource based on corporate profits.
Paying back debt owed on the recovery plan
The proceeds from the new “Own Resources” will be essential to repay the debt under the EU’s recovery plan, especially with rising interest rates having a heavy impact on the EU budget. With the new revenue, the EU budget could be financed reliably on a long-term basis and also fund new priorities while avoiding having to reduce existing EU programmes and policies, MEPs say.
Prevent excessively high rebates for some member states
Against the background of high inflation, temporary reductions in the form of lump sums for Denmark, Germany, the Netherlands, Austria and Sweden, from which they benefit for the period 2020-2027, have increased unexpectedly and disproportionately. MEPs therefore demand that these lump sums be adjusted annually as is the EU budget, i.e. on the basis of a fixed deflator of 2% per year.
José Manuel Fernandes (EPP, PT), co-rapporteur: “We need new own resources to respond effectively to future crises and uphold the EU’s commitments to European citizens, all without burdening future generations with debt. Without these, EU programmes are slated to face cuts exceeding €15 billion annually. To avoid that, we are left with two options: either increasing Member States' contributions to the EU budget, thereby burdening citizens, or approving new own resources. The latter is the preferred path forward, and the Council must address this with the utmost urgency.”
Valérie Hayer (RENEW, FR), co-rapporteur: "Time is running out and the Council must speed up. I call on it to agree on this package as swiftly as possible. Europe cannot rely on Orbán's Council presidency in 2024 when it comes to social justice; it simply won't happen!"
Now that Parliament has approved this opinion under the consultation procedure, the Council of the EU has to endorse the proposals unanimously. Member states then have to ratify any new Own Resources Decision.
In 2020, along with the current long-term EU budget (multi-annual financial framework 2021-2027), the EU institutions agreed on a legally binding roadmap introducing new sources of EU revenue. On that basis, the plastics own resource, introduced in 2021, was the first new source of EU revenue since 1988. At the end of 2021, the Commission proposed three further own resources, updated in June 2023, but which EU countries have not yet adopted. MEPs urged member states to adopt the new EU income streams before EU elections in 2024.
Responding to the concerns of citizens
With its position adopted today, Parliament responds to demands of citizens put forward in the conclusions of the Conference of the Future of Europe, notably in proposal 16 on Fiscal and tax policies (paragraph 5).