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Brussels urges EU VAT, new 'rebates' in big budget overhaul

29 June 2011, 23:04 CET
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Brussels urges EU VAT, new 'rebates' in big budget overhaul

EU Budget

(BRUSSELS) - The European Commission on Wednesday proposed an EU sales tax, a financial services tax and a sweeping reform of "rebates", including Britain's, as part of a vast rethink of the EU budget.

Commission president Jose Manuel Barroso said the European Union needed "an innovative budget" where "every euro spent reaches its target" in the next budgetary period from 2014 to 2020.

Presenting plans to enable the European Union's executive arm to raise its own finance rather than largely depending on funding by EU states, Barroso said the next seven-year budget would amount to 1,025 billion euros in commitments.

But the share of monies raised by the EU through new measures could amount to almost half of EU budget revenue, with contributions from member states falling from 76 percent of the total as is currently the case, to around one third.

To increase the EU executive's ability to levy resources, the commission suggested a "Tobin" tax on financial transactions in Europe, which is likely to be opposed by Britain, France and Germany, which back such a tax at the global level since then it would apply to all countries equally.

It also proposed an EU-wide sales tax from 2014.

The new VAT would be levied across the 27-nation bloc, with a fixed percentage raised by governents and transferred directly to the EU during the next seven-year budget, from 2014 to 2020.

And it also called for a sweeping reform of EU 'rebates', the system of paybacks to certain member states each year which notably include a huge rebate to London negotiated decades back by Margaret Thatcher.

The reform of rebates, originally a compensation to members whose contribution was considered excessive, would also affect Germany, the Netherlands, Austria and Sweden.

Britain immediately slammed the budgetary proposals as "unrealistic" and "too large".

"The European Commission's proposal is completely unrealistic," a British government spokesman said. "It is too large, not the restrained budget they claim and incompatible with the tough decisions being taken in countries across Europe."

Multiannual Financial Framework (MFF) - guide

Budget 2011 in figures


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