Brussels (Brussels Morning) MEPs in the Budget Committee have lashed out against the European Commission’s delay in proposing new sources of income for the EU. This delay is threatening the bloc’s capacity to cover repayments of the NextGenerationEU borrowing, the Parliament said.
MEPs said the Commission is in breach of the 2020 Inter-institutional Agreement which prescribes proposing three new EU sources of income by June 2021. Now, the delay is undermining the balance and architecture of the financing of the recovery package.
Budget Commissioner Joahannes Hahn said the Commission put on hold its work on a new digital levy as a new Own Resource for the Union’s budget.
OECD and G20 pressure
The Commission’s stalling followed an agreement between the Organisation for Economic Cooperation and Development (OECD) and the G20 on the reform of international taxation in July, which is meant to be finalised by October.
MEP Elisabetta Gualmini (S&D), negotiator on Own Resources for the EU budget, expressed concerns about the “unilateral decision” taken by the Commission.
“The postponement of the proposal for Own Resources for the EU budget could be used in the future by some member states in the Council of the EU as a negative precedent in order to act against the establishment of a new basket of Own Resources,” said Gualmini.
“It is essential for the European Commission to have a “Plan B” for the worst-case scenario: we cannot wait endlessly (for) actions needed now to repay the costs and interests of the NextGenerationEU,” added the MEP.
In a press statement, S&D MEPs also reiterated that the debate and the decisions on the issue of Own Resources cannot depend on the actions, or the lack of them, by other international players.
Commission in breach
A large majority of MEPs found that the Commission is in breach of the Interinstitutional Agreement of December 2020, which contains a legally binding roadmap towards the introduction of new Own Resources.
According to the Agreement, the Commission must put forward, by June 2021, a proposal to introduce three new Own Resources: a carbon border adjustment mechanism (CBAM), a digital levy and an own resource based on a reviewed Emissions Trading System (ETS).
EU budget “at stake”
MEPs further noted that the “protection of the EU budget is at stake.” They went on to say that without new Own Resources, there are not sufficient funds to repay the borrowing for the “NextGenerationEU” recovery plan.
If nothing is done, national contributions to the EU budget must be increased, or at worst, future EU budgets will be cut.
Parliament maintained that the Commission should not be a hostage of OECD/G20 negotiations.
“Parliament was disappointed when the Commission failed to present legislative proposals for new Own Resources in the first half of the year. The digital levy in the meantime has been put on ice because of the OECD negotiations and under some not too subtle pressure from the US,” said MEP Johan Van Overtveldt (ECR).
ETS and CBAM excluded from new resources
As part of its ‘Fit for 55’ package, the Commission submitted proposals for a revised ETS directive and the introduction of a CBAM. However, the Commission did not accompany these initiatives with a proposal for a new Own Resources decision.
“After the G20 meeting in October we will make a proposal no matter if there is an agreement or not,” promised Commissioner Hahn to MEPs.
He confirmed that the whole package new Own Resources is needed in order to generate sufficient funds.
The “Own Resources Decision” establishes how the EU budget is financed.