January 6, 2016
The European Council, under the pressure of the European Parliament, has agreed to establish a High Level Group on Own Resources, with representatives of all Institutions and chaired by prof. Mario Monti1. The group has already produced a first interim report and is preparing a Conference (June 2016) with all National Parliaments before presenting its final report to the European Council, end 2016.
The discussion over the creation of European taxes in replacement of national contributions, is, to say the least, controversial with a combination of technical, institutional, constitutional arguments2. At the same time, in times of economic crises and transnational challenges – refugees, migration flux, climate changes, energy, transport, security – the need for an increase of European funds is important.
All these elements seemed to create a momentum for the reform of an obsolete system3 more transparent for citizens than the current one.
Surprisingly the European Commission, last November 2015, took a decision on own resources, which can be considered innovative, to say the least. The Commission’s decision, with the ‘complicity’ of Member States, might influence the reflections on the own resources’ evolution and the follow up of the High Level Group on Own Resources.
The European Council of October 15th, committed the EU and its Member States5 ‘to increase ‘the cooperation with Turkey and step up their political and financial engagement substantially within the established framework’. Following this conclusion the Commission took an November 24th, 2015 an autonomous decision on ‘the coordination of the actions of the Union and of the Member States through a coordination mechanism, the Refugee Facility for Turkey. To finance this facility the Commission foresees an intervention of the EU budget up to a level of 500 mio Euros and a direct intervention of the Member States for 2.500 Mio Euros, as assigned revenues to the EU Budget and with the same share of the GNI
The mechanism of ‘assigned revenue’ is foreseen by the Financial Regulation, Article 21 (2) (b) , and indeed covers ‘financial contributions from Member States and third countries …..to certain external aid projects or programs financed by the Union and managed by the Commission on their behalf’.
This mechanism has been used, up-to-now, successfully, to permit the participation of third countries to EU programs or to allow a limited number of Member States wishing to contribute to Trust Funds launched and managed by the Commission.
The novelty of this case is that the financing of a conclusion of the European Council is made by all 28 Member States, which are expected to contribute, for a relatively large amount, with the standard GNI key to calculate the normal financing of the EU budget.
Through this mechanism, the Commission creates for the first time a ‘fifth resources’ outside the procedures foreseen by the Treaties to finance EU decisions topping up the EU Budget.
Even if this measure should be assessed with the urgency of the situation of the refugees flux towards Europe, the fact that all Member States finance a community decision with the GNI share could raise some questions on the procedure followed. These amounts will be outside of the ceilings of the Multiannual Financial Framework, without following the procedure of revision which involve the European Parliament, but also National Parliaments. Doubts could be raised as well on the respect of the principle of unity of the budget and of the extension of the control mechanisms, Court of Auditors and discharge procedure, but also the capacity of the Commission to enforce its decision. These doubts have been voiced by some MEPs during the presentation by the Commission of this decision, at the committee on budgets of the European Parliament (click here to follow the debate in BUDG point 11).
This example confirms that, in spite of the Euroscepticism, the need for an intervention of the European Union is still very high. The challenges of our century, such as the displacement of refugees, the migration flux, the coordination of fight against the terrorism, the reinforcement of the security of EU citizens, the support and coordination of the energy and transport sector, the support of measures to combat the climate changes, to mention only a few, need more European presence and funds. In those areas the subsidiarity of the EU intervention, to complement the Member States initiatives, is not questioned on the contrary, the absence of Europe is often criticized as one of the cause of the gravity of the problems, which have a worldwide dimension.
To face these challenges EU need financial resources, even beyond the current ceilings. This can be achieved by a new European fiscal policy. The introduction of EU taxes can be better explained and accepted by EU citizens if the objectives of EU policies are clearly identified and shared.
To conclude, the present times offer the perfect window opportunity for the reform of own resources. The Commission’s decision, with the agreement of Member States, opens the door to a renationalisation of own resources and could undermine the work done by the HLGOR. Nevertheless, the High Level group chaired by prof. Monti has the authority to present ambitious proposals and convince the EU Prime Ministers and Head of States of the necessity of a reform of the own resources system, to facilitate the European dimension of Member State initiative. The creative proposal of the Commission could also be seen as a positive contribution to the debate and, eventually, also find a place in the HLGOR proposals, ie as an ad hoc source of financing for specific initiatives in the Eurozone ?Author : Alfredo De Feo