Aiming at a Common Market, not redistribution

This latest report from UK think tank EPICENTER provides a response to the EU’s Multiannual Financial Framework.

A number of changes to the EU budget structure proposed by the European Commission are in the right direction, proposing to increase funding for those areas where it may add value. However, the sums allocated for the common agricultural policy and cohesion policy are still far too large, making altogether around two thirds of the proposed EU budget, while the sums proposed for those areas which could bring value-added and contribute to the goals of the EU27 are modest. This ill-spending should be redirected to the areas which contribute to the consolidation of the common market, and more generally create positive spill-overs from EU funding to its member states, maximizing benefits from interdependencies and minimizing risks from it. The examples of such targeted spending include cross-border infrastructure, external border protection, facilitation of structural reforms, education and science, and health care programmes. The revenue side of the EU budget should be made more transparent and connected to the contributions of its member states based on agreed proportion of their GNI, while other sources should be phased out either as a result of external trade policy decisions (removal of import duties) or by the agreement of member states (in the case of VAT based revenues). The proposals to introduce new sources of revenue, such as a tax on the access to the common market, contradict the principles of a more transparent and manageable budget. The proposed new tax revenue measures which could eventually lead to EU wide taxes are not justified and would increase the overall tax burden. Some of the proposed new taxes would be counter-productive to the EU efforts to re-shore production and increase investments in the EU common market. Besides, since taxation competences are core state powers, they should remain a matter of the EU member states on the grounds of democratic legitimacy. Corrections of payments (rebates) should be phased out, given that their presence significantly reduces the transparency of the EU budget.

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