The European Commission yesterday proposed new ways of collecting money from member states, with an EU value added tax and a financial sector tax that would replace the current system of sending part of a country’s VAT proceeds to Brussels.
The formal EU budgetary proposals presented last night, for the period 2014-2020, raise the curtain on a battle that is expected to gather momentum over the next few weeks on who will pay what and who will gain from the seven-year financial plan.
Agreement has to be reached between the 27 member states and the European Parliament by the end of next year. The new methods of direct funding for the EU are expected to be among the most controversial proposals in the upcoming debate.
The budget includes spending appropriations of €1,025 billion over the seven-year period. Conscious of the fact that this is a time of austerity and many contributing member states are already demanding a freeze on the EU’s budget, the Commission did not propose a massive increase. It said the whole financial perspectives will only amount to 1.05 per cent of the EU’s Gross National Income (GNI).
The EU executive is also proposing a new category of member states, to be called “transition countries” which although no longer eligible to the highest EU aid possible, will still be net beneficiaries at the end of the seven years.
Although it is too early to be sure, Commission sources told The Times the indications were that Malta would fall into this category and would not become a net contributor by the end of 2020.
During the last financial perspectives for the current period, 2007 to 2013, Malta was eligible for the highest level of EU aid and has been allocated more than €1 billion worth of funds for various projects including the building of several new roads.
“We are proposing an ambitious, and at the same time responsible budget,” Commission President José Manuel Barroso told a press conference in Brussels last night.
“It is a realistic proposal with which we can make a difference. This is an innovative budget and I invite you to look beyond the headline figures to see how, with this budget, we will deliver growth and jobs.”
President Barroso said that through smart reallocation of the budget, the Commission has created room to finance new priorities such as cross-border infrastructure for energy and transport, research and development, education and culture, securing external borders and strengthening its neighbours to the South and East.
The Commission, he said, was also proposing a modernisation of all its policies by simplifying its programmes and by setting more conditions on how funds were spent.
The budget will have to be agreed unanimously by the 27 member states and approved by the EP. Many changes are expected to be negotiated before the final version of the multiannual financial perspectives receives the green light.