No consent to ‘historic’ recovery plan without new revenues, MEPs warn

A general view of a plenary session of the European Parliament debating on the novel coronavirus Covid-19 outbreak, in Brussels, Belgium, 10 March 2020. [EPA-EFE/OLIVIER HOSLET]

The European Parliament will only give its consent to a new EU long-term budget if the basket of own resources is increased to pay for the recovery fund, the main political groups warned in a letter addressed to EU leaders ahead of Friday’s (19 June) summit. 

“Introducing new EU-wide streams of revenue is the only way to lower the need for direct transfers from national treasuries and therefore ease the pressure on citizens. The money must be found elsewhere: in the pockets of big tech, big polluters, and tax dodgers,” EU lawmakers warned. 

The missive was signed off by the leaders of five out of the seven political groups: Manfred Weber, President of the EPP, Iratxe García-Perez, President of the S&D, Dacian Cioloș, President of Renew Europe, Philippe Lamberts and Ska Keller, as Co-Presidents of the Green/ALE and Manon Aubry and Martin Schirdewan, Co-Presidents of GUE/NGL.

The Commission proposal for a recovery plan includes a €1.1 trillion MFF (Multiannual Financial Framework) and a €750 billion instrument to tackle the economic fallout of the COVID-19 outbreak, to be funded by borrowing money from the markets using the budget as a guarantee.

MEPs want to have an agreement on own resources to make sure future EU long-term budgets do not see cuts to pay for the Commission’s borrowing,.

“We must act as responsible politicians: the EU’s priorities will not disappear after our terms,” they said, adding it would also send a positive sign to the markets. 

EU lawmakers demanded the first tools be up running by 2021. “We will not be satisfied by a promise of “future proposals”,” the parliamentarians warned and demanded that the Commission and Council agree at least on a timeline.

An EU official said it was hard to imagine a discussion on own resources during Friday’s Council since for that discussion to take place, the Commission will have to table concrete proposals.

Ursula von der Leyen’s executive has proposed a digital tax, the trade emission system, and levy on plastics or multinationals operating in the single market as new ‘own resources’.

An EU official added that the question of sovereignty in taxation is very controversial for some member states. Unanimity is required for an agreement on EU-wide tax policy.

Will the EU have a new ‘single market tax' for multinationals?

The European Commission is working on a proposal for a new tax on multinationals operating on the single market to finance the recently proposed recovery fund, but the Commissioner for Internal Market, Thierry Breton, told EURACTIV he recommends being “very cautious” rather than too imaginative in picking new levies.

A matter of trust

“EU institutions, together with the member states, have to collectively ensure that Europe will get out of this crisis stronger, and this is the expectation of our citizens; letting their hopes down is not an option,” the letter read. 

In their letter, MEPs touched one of the most controversial issues on the table, the proportions of the cash that will be in grants and loans. For EU lawmakers, at least €500 billion of the recovery instrument should be distributed in grants – which clashes with the view of a number of member states – particularly the so-called ‘Frugal Four’, who say that the instrument should be largely based on loans.

MEPs described the crisis as “a wake-up call” and argued the money should finance the green transition, the digital transformation and foster sustainable growth. “Solidarity goes hand in hand with responsibility,” they said. 

The Parliament has been insisting from the beginning on having a say on the format and management of the recovery plan, “with the aim of increasing its transparency and democratic accountability”.

The EU’s recovery plan needs to be agreed by unanimity at the level of the European Council but the Parliament would still need to give its consent. 

While a majority of groups backed the letter, ECR and Democracy and Identity did not join the call. An ECR spokesperson told EURACTIV the group refrained for signing up “because we saw a risk that some of the claims contained within the letter could lead to overstepping of the EU treaties.”

Both the Parliament and the Council seem to agree on the need to reach an agreement before summer. EU officials have welcomed the positive tone from member states in the past few weeks, aware of the extraordinary circumstances, and hope to have a deal by mid-July. 

EU agreement on recovery plan by July 'very difficult', officials warn

It will be “very difficult” to reach an agreement on the recovery fund and the EU’s overall seven-year budget by July, as intended, given the disagreements over the size, the distribution of the stimulus and the attached conditions, EU officials and national diplomats acknowledged on Wednesday (10 June).

[Edited by Benjamin Fox]

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