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MAKOISIA LUKUHETKIÄ, VALITAN, ENGLANNIKSI KUN EN NÄITÄ JUURI NYT EHDI KÄÄNTÄÄ:

The Committee on Budgets

SECRETARIAT


THE SYSTEM OF OWN RESOURCES

DIALOGUE WITH THE BUDGET COMMITTEES

OF THE NATIONAL PARLIAMENTS OF THE 25 MEMBER STAT

STANDING RAPPORTEUR: ALAIN LAMASSOURE

SUMMARIES OF MEETINGS AND WRITTEN REPLIES

as per 24 January 2007


Table of contents

Belgium................................................................................................................... 5

Germany............................................................................................................... 33

Spain...................................................................................................................... 45

France................................................................................................................... 51

Cyprus................................................................................................................... 69

Lithuania............................................................................................................... 75

Hungary................................................................................................................ 81

Portugal................................................................................................................. 85

Slovenia................................................................................................................. 91

Slovakia................................................................................................................. 99

Finland................................................................................................................ 105

Sweden................................................................................................................ 111

United Kingdom................................................................................................. 115

Annex I - COBU documents............................................................................. 119

Letter and questionnaire.......................................................................... 121

Annex II - Joint Parliamentary Meeting 8/9 May 2006.................................. 125

Austrian position on own resources......................................................... 127

Report of working group on the EU's future resources........................ 133

Annex III - Joint Parliamentary Meeting 4/5 December 2006....................... 137

Report of working group on the EU's future resources........................ 139


FINLAND

MEETINGS OF ALAIN LAMASSOURE,

STANDING RAPPORTEUR FOR OWN RESOURCES

HELSINKI, 7 MARCH 2006

Participants:

Mr. Alain LAMASSOURE (AL), Standing rapporteur on own resources

Secretariat: Mrs. Monika STRASSER, Administrator

Mme Ulla-Maj WIDEROOS (UMW), Minister responsible for own resources, Ministry of Finance

Mr. Jari KOSKINEN (JK), Chairman of the Sub-committee on taxation, Eduskunta

1) Meeting with Mme Ulla-Maj Wideroos, Minister responsible for own resources, Ministry of Finance, 16: 15 hours

AL commenced the meeting by giving some background information on the reasons for his meetings with the national parliaments. He reminded that the own resources were not a community competence but one of the Member States. This was why he was aiming at finding a common proposal of EP and national parliaments in order to prepare for the review of expenditure and revenue that was supposed to take place in 2008.

AL spoke out in favour of a 2-stages-approach: First, the current system should be improved by making it fairer, simpler and more transparent. Secondly, a new genuine own resource should be introduced as per 2013.

In response to UMW 's question, if he had had any feedback on this from other Member States, AL explained that there had not been much reaction so far. Net-beneficiaries were happy with the current situation, anyway, while net-contributors who were not happy with the current situation had been made happy by the latest British proposals.

AL reminded that the amounts at stake were very low. He was convinced that, at some stage, part of a national tax would have to be allocated to the Union. There had to be a treaty or an inter-institutional agreement by which Member States decided to allocate, for some time, part of some national tax to the Union without first charging the national budget with it. This treaty or agreement would require unanimity in Council and ratification by all national parliaments.

For UMW the first stage towards achieving a result was taking the decision on whether to try and accomplish this by many small steps or by one large step.

AL preferred a gradual progressive approach. However, he pointed out that if the new system should be applied as from 2013, negotiations should start without delay.

To UMW's question how realistic these proposals were, AL responded that by mid-2006 he hoped to have received the first position of half of the countries. They should be a representative sample of big and small, rich and poor, and old and new Member States.

It was only logical that a Union of 28 could not be financed with the same funds as a Union of 12. 1% of GNI was not enough, 1.1% or 1.07% or any other figure in this range was needed. However, none of the big countries wanted to pay the extra 0.1% or so. This was why a new system was needed.

UMW concluded the meeting by stating that Finland was always open for negotiations.

2) Meeting with Mr. Jari Koskinen, Chairman of the Sub-committee on taxation, Eduskunta, 17:30 hours

AL introduced the topic by describing the development of an original system of own resources, as in the beginning of the European Community, to a system of Member States' contributions as it was in place now, 20 years later. At the moment 90% of EU revenue came from VAT and GNI which had a lot of drawbacks like for example the dominance of the principle of just returns. Net contributors just wanted changes for their own situation and net-receivers were happy.

The current system needed to be updated otherwise the policies decided by the European Council would not be implemented because the Member States had their own problems and could not even comply with the stability pact.

In its considerations of the reform of the own resources system, COBU wanted to work hand-in-hand with the national parliaments. The EP could do the stocktaking and could launch initiatives but the subject was in the competence of the Member States. The national parliaments had the power, the European Parliament had the vision.

On the procedure, AL explained that first the opinions of 10 - 12 parliaments should be collected. By the end of 2006 he hoped to have a resolution adopted which would enjoy broad consensus within the EP and amongst a majority of national parliaments.

In the current negotiations on IIA and financial perspective the governments should make a commitment to include a reform of own resources in the review process 2008.

His visit to Helsinki, AL stated, was to be seen in this context as part of a pre-, pre-, pre-, pre-negotiation. He wanted to find out which method Finland wanted and which timetable.

JK stressed that negotiations on this subject had been and would always be difficult. Finland had considered a GNI based resource the best way to finance the budget. They thought this was a fair indicator of the prosperity of a country. This would of course mean less weight on a VAT resource and a slow disappearance of traditional own resources.

Finland, for example, did not need the kind of CAP currently in place. However, if everybody in the Union agreed that cohesion and CAP were common tasks then there should also be an agreement on how to finance it.

JK underlined that the British rebate was not acceptable to Finland who considered it unfair. He also reminded that there was still some misuse of money and called for a better auditing system.

With regard to an EU tax, JK noted that people in Finland were very much against it. How could they know how this money would be used? Whether it went to the right places? JK was also doubtful if using part of an existing tax would work.

AL responded that the EP was not biased and open to all proposals. Fact was that the current system did not work and a new one needed to be found. The recent Finnish proposals on how to improve the current system had been very interesting in this respect.

Of course, it should be insisted upon that EU money was spent correctly, value for money should be guaranteed. However, AL reminded that the EP Committee on Budgetary Control worked together with the Court of Auditors in order to check on how EU money was spent.

According to AL, for the next few years a European tax would not make sense because only small amounts were needed. To introduce a new tax for some 300 million taxpayers to raise something like 1/1000 of GNI would just cause collection costs that were totally out of proportion.

It would be much simpler to use part of a tax existing in all Member States - maybe in connection with the common market. Thus, the additional wealth created by the internal market could be used to fund new EU policies. AL stressed once more that this did not mean raising the current level of VAT. The idea was, for example, to dedicate to the European Union budget a part of the VAT on goods imported into a MemberState from another MemberState. In parallel, the Member States' contributions to the EU budget would be decreased or abolished. Another possibility was the harmonisation of the profit tax - rates and tax bases - followed by part of it going directly into the EU budget.

AL underlined that, whatever way would be chosen, it would be a decision taken by a Member State to allocate part of their revenue directly to the Union and not a decision to grant the Union the right to levy taxes.

According to JK, tax harmonisation was not any problem for Finland. He knew that other Member States wanted tax competition. For Finland there was enough competition outside Europe.

JK found the VAT idea quite interesting since it would also help the Member States to make their own budgets and it would be transparent for the consumers. Concluding the meeting, he showed himself open to jointly look for other possible answers.


Annex

Questionnaire for the national parliaments

1. Do you think that the safeguards enabling control of the Community budget should be maintained:

- balanced budget requirement, with absolutely no possibility of borrowing; - overall ceiling for resources, pegged to gross national income; - multi-annual financial framework?

2. Are you satisfied with the current arrangements for financing the EU budget?

3. If not, do you consider that the budget should be financed exclusively through national contributions, exclusively through tax-based resources paid directly to the Union, or through a combination of the two?

4. Concerning national contributions, in the long term, would you like GNI to be taken as the sole criterion for assessing wealth, or would you prefer a different criterion?

5. If the current system of national contributions is reformed, should this take the form of a gradual extension of the ceiling for the highest contributions or an elimination - again gradual - of all ceilings?

6. If you agree with the principle of new own resources being allocated to the EU budget:

6.1. should these take the form of a new tax decided upon and directly levied at European level: an ecotax or a tax on goods vehicles, aviation fuel or financial transactions, etc.,

6.2. or would you prefer a proportion of a national tax to be allocated, in exchange for an equivalent reduction in the national contribution to the European budget: - excise duties on petroleum products; - VAT; - other indirect taxes; - tax on company profits; - personal income tax?

7. In the latter case, could a scenario be envisaged in which the choice of tax and the limits on the 'European' share were decided by the national parliaments (e.g. by way of an agreement submitted to the parliament for ratification), while still giving the European Institutions room for manoeuvre to specify the practical arrangements?

8. In your opinion, should the EU budget be incorporated into the Stability and Growth Pact, to form part of collective discipline and to support action by Member States?

9. Do you feel that a 'principle of cost neutrality' should, or even must, be adopted, on the basis of which any new tax levied on taxpayers to finance a European policy would be offset by an equivalent reduction elsewhere?

10. If so, could the national audit offices and European Court of Auditors be invited to verify this principle was being applied? Would an alternative solution be preferable?


ANNEX III

Documents published in connection with the joint parliamentary meeting on the future of europe

4/5 December 2006 - Brussels

 

JOINT PARLIAMENTARY MEETING ON THE FUTURE OF THE EUROPEAN UNION, 4-5 December 2006/Brussels:

December 5 2006 Alain Lamassoure

REFORM OF THE OWN RESOURCES OF

THE EUROPEAN UNION

Report of the Working group of the Joint Parliamentary Meeting

on the Future of Europe of December 4/5


On the own resources of the Community budget, the European Parliament and the National Parliaments engaged in first exchanges already eighteen months ago. To date, all the national Parliaments took part in at least one of the four common working meetings, and 17 parliamentary assemblies announced their observation, either in writing, or at meetings organized by them with the rapporteur of the European Parliament.


In the working group of December 4, 27 participants took part in the debate. They represented 15 different parliamentary assemblies. It should be noted that both Chambers of the Czech and Italian Parliaments were represented, and that the President of the Parliament of the PortugueseRepublic, Jaime Gama, took part in our work.

Of course, the range of opinions stated is very broad. Nevertheless, some common points emerged on the diagnosis, the calendar, and on some guiding principles. It is necessary to insist on the fact that at this stage, they are exchanges of views which do not engage any Parliament politically, nor any political party of a MemberState. The very large majority of the political parties did not have an internal debate yet on this subject, and thus do not have a final position. And, naturally, such a reform can be decided only unanimously by the 27 governments, and will require the ratification of the 27 national Parliaments.


I - All the speakers share the diagnosis on the very serious defects of the current system of resources of the European Union, and on its consequences regarding the impossibility to finance major European policies.


The revision clause laid down in the last inter-institutional agreement must thus be made profitable to give to the Union a financing system that is simple, clear, transparent, equitable, and subject to perfectly democratic procedures. The general wish is to manage a political agreement in 2008-2009, for a phased introduction of the reform, at the latest since 2014.

II - On the guidelines which must be the basis and the framework of the reform, the discussion progressed much. Frequently quoted were:

- The “constitutional precondition”. It appears difficult to open an in-depth discussion on the financing of the Community policies, without first having clarified, in one way or another, the destiny of the project of the European Constitution. The needs of the Union depend on its competences.


- The maintenance of the discipline to which the European budget is subjected under the terms of the current treaties: obligation of budgetary balance, ceiling of the total amount, framework for the annual budget from a multi-annual point of view.


- The respect of the tax sovereignty of the Member States, which will retain their exclusive right to raise taxes.

- Tax neutrality, or principle of constancy: all things being equal, the transfer of a policy to the European level should not increase the total public expenditure, nor the tax pressure.


- The maintenance of the level of magnitude of the budget of the Union. The truth is that the opinions here are much contrasted, some insisting on the economic insignificance of a budget limited to 1 % of the GNI, others recommending the search for initial economies. But the margin between the current level of the budget 2007 (0,99 %) and the authorized ceiling (1,24 %) makes this debate theoretical for the next ten years.


- The fundamental political bond between the reform of the resources and the revision of the expenditure. The members of Parliament are clearly on the same line as the governments.


- Interest to continue economic policies supporting the maximum of growth, to increase the output of the GNI resource.


- Need for not penalizing the European companies, nor, more generally, economic actors compared to the rest of the world.


- Interest to resort to national taxes whose base is already, or could be, harmonized.

- Need for a progressive installation of any reform.

III - On the possible options, one could detect at least some tendencies.

1 - The quasi unanimous rejection of the creation of a directly affected new tax to the Union (“the European tax”). Some do not exclude this solution in the long term, but it seems useless or premature with almost all.


2 - Interest to preserve a “GNI resource”, at least for a time and as an element of a more complete system. But with the proviso of simplifying the current system considerably, in order to make it transparent and fair. And by making sure that serious technical uncertainties which periodically affect the evaluation of the GNI of certain Member States can be overcome.


3 - Among the existing national taxes, the VAT and the taxes related to environmental policies (eco-tax, CO2 emissions rights, taxes on kerosene) were most often quoted. Several speakers, of very diverse backgrounds, underline the interest in a combination of several taxes, of which a small part only could be assigned to the European budget: the cocktail could include, for example, a little CO2, a bit of VAT, a shade of GNI…


4 - The income tax of the companies was not defended. Its adversaries are generally in favour to encourage tax competition in Europe. The rapporteur pointed out that the harmonization of the basis of a tax does not prevent competition at all: on the contrary, it makes it transparent and honest, which is hardly the case today.


5 - Members of Parliament also evoked other tracks, such as taxation of the financial operations.


IV - Possible follow up:


Resulting from public interventions and private contacts, there is a great consensus to continue this joint work. The objective should be at least to manage to establish a common dossier about which all the Parliaments could have a say at the proper time.

Mr. Gama, President of the Portuguese Parliament, who took part in the working group, proposed to organize, within the COSAC framework, a conference of the chairmen of the committees on budget and finances of the national parliaments and the European Parliament, open also to other interested members. We could set up a united working group, which could meet two or three times in the first half of the next year, during the German presidency, to prepare this meeting. Under the only responsibility of its members, this group would prepare an analytical table of the technical characteristics, the financial output, the advantages and disadvantages of the possible options for the reform. Each institution would remain then free to make its deliberations and its choices, but at least everybody would work on the same basis - all enlightened by the same information and our common exchanges.

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