Members of the European Parliament (MEPs) said they won’t pass the EU’s latest long-term budget unless the European Commission considers additional own resources. Several called for taxing emissions, digital services, and corporations that practice tax avoidance.
In a fiery May 13 plenary debate, many MEPs questioned how the commission plans to fund both the trillion-dollar multiannual financial framework (MFF) and a new coronavirus recovery fund.
Commission President Ursula von der Leyen said the coronavirus recovery fund, which will offer grants and the possibility to frontload financing this year, will be channeled through the MFF. The fund will go toward aiding member states’ recovery, kick-starting the economy and helping private investment restart, and strengthening existing programs like RescEU and Horizon Europe.
MEPs adopted a legislative resolution requesting that the commission submit a proposal for the MFF contingency plan by June 15. If the MFF vote is delayed, some European programs that provide a safety net to individuals, regions, agriculture, education, and business will expire at the end of 2020.
MEPs from five political groups submitted a draft resolution May 12 threatening to withhold passage of the MFF if the commission does not consider additional funding options.
The draft resolution proposes several new own resources, including revenue from a common consolidated corporate tax base, a digital services tax, a financial transaction tax, levies on plastics and imported products produced with lower CO2 emissions standards, and income from the emissions trading scheme.
Additionally, the draft resolution supports the abolition of all rebates and corrections, the simplification of the EU VAT contribution, and the use of fines and fees to add to EU budget revenue. MEPs are set to vote on the resolution May 15.
Luis Garicano, a Spanish MEP from the Renew Europe Group who took part in drafting the resolution, said many MEPs are wondering how the EU will pay for the MFF and recovery fund without piling debt onto already burdened member states.
“We think this interest and this principal from these long-term loans that we need for the plan have to be paid with new own resources that make those who cheat on their taxes, the digital companies that are not contributing as much as they should, [and] the big polluters, pay what they should be paying,” Garicano said during the debate.
The EU’s own resources include a portion of the national VAT, sugar levies, customs duties, EU fines, and national contributions of about 1 percent of the gross national income.
Guy Verhofstadt, a Belgian MEP from the Renew Europe Group, criticized the commission’s plan for the recovery fund as “business as usual,” and said the EU VAT and customs duties will not be enough to sustain it. He called for taxes on digital services and pollution, and recommended the creation of an EU finance board.
Others, like Belgian MEP Marc Botenga of the Group of the European United Left - Nordic Green Left, targeted the ultra-wealthy and tax havens in his criticisms of the funding mechanism.
“I found money in Europe, and we won’t even have to ask the German taxpayer to pay for Italian billionaires to put it in the Netherlands tax haven. . . . The money is there. Let people pay. Let’s have a corona tax on the wealth of the super-rich. The billionaires won’t even notice it, and it’s going to make a huge difference for the people of Europe,” Botenga said.
The draft resolution says the funds from new revenue sources should be directed toward projects important to moving Europe forward, like the Paris Agreement; the EU’s climate neutrality and biodiversity objectives such as the European Green Deal; and the fight against tax evasion, tax avoidance, and money laundering.