EU will attack 'budget sacred cows' next month

(BRUSSELS) - Europe will next month attack budget sacred cows including cuts to farm spending and national rebates, and the introduction of new bloc-wide taxes, the European Union's budget spokesman said on Monday.

"The finishing touches are being put on the proposals, they will have numbers and be precise," said Patrizio Fiorilli, spokesman for European Union budget commissioner Janusz Lewandowski.

Set for presentation on September 21 or 28, "it will be difficult" to gain acceptance, he acknowledged, citing "conflicting interests" notably where the bloc's Common Agricultural Policy is concerned.

That historical farm support mechanism, which accounts for close to half of the EU's total spending, is nevertheless one Fiorilli says Europe must re-shape if it is to find the sustainable cuts member states want.

National contributions from the EU's 27 member states account for 75 percent of its revenue, the rest coming from VAT and a tax on sugar.

The commission's proposals will identify cuts and potential new sources of income.

"Everything will be looked at, especially the weight of agriculture in the EU budget -- currently 45 percent of spending -- but also the rebates accorded to Britain, Germany, Denmark and the Netherlands," Fiorilli underlined.

Lewandowski meanwhile told the Financial Times Deutschland on Monday that four ideas for new tax revenues were being explored: a direct levy on national taxpayers, a tax on financial transactions, one on air transport and another on carbon emissions trading revenues.

All are seen as long-term goals, but are being promoted in the context of difficult negotiations over a new five-year EU budget from next year.

The commission has asked for a controversial 5.9-percent increase to 130 billion (more than 170 billion dollars) including a 4.5-percent rise in the costs of running the EU's many institutions.

National governements argue that the increase should be restricted to three percent, given freezes or cuts ordered by the commission in many member states where public deficits have ballooned since the worst recession since the 1930s.

The European parlement will present counter-proposals in October.