France picks up fight on ‘own resources’ for EU budget

Bernard Cazeneuve PS_small.jpg

France has taken the lead in demanding new "own resources" for the European Union's upcoming long-term budget for 2014-2020, placing Paris firmly on a collision course with Berlin, which wants to retain national contributions as the biggest share.

Bernard Cazeneuve, French minister-delegate for European affairs, said Paris wants to open a serious discussion about the EU's future finances, spearheading a campaign for Brussels to be allowed to raise its own taxes to win additional sources of revenue.

Plans to increase the EU's so-called "own-resources" were put forward by the European Commission in June 2011, when it tabled its budget proposal for the 2014-2020 period.

Suggestions include a tax on financial transactions, an EU VAT, a charge related to air transport and a share of auctioning revenue derived from the bloc's CO2 emissions trading scheme.

These ideas were immediately rejected by Britain as "unrealistic".

France 'very aggressive on the issue of own resources'

Speaking to Brussels-based journalists on Tuesday (24 July), Cazeneuve said France wants to "put the reflection on own resources … at the same level as the debate on expenses," which currently dominates the European discussions because of the ongoing debt crisis.

With austerity biting into national finances, he said France wants the EU budget to become "far more dynamic than what has prevailed until now" and support economic growth.

France's push for "own resources" comes as negotiations on the EU's future long-term budget enters a decisive stage, with a meeting of the General Affairs Council on Tuesday (24 July) looking at an updated proposal from the European Commission.

Seen from Paris, the EU budget must reflect the government's priority to support economic growth while keeping with national commitments to rein in public deficits. Own resources, Cazeneuve explained, would also allow reducing national contributions to the EU budget, helping to improve national finances.

"It is possible to open the debate on own resources for the European Union without calling into question the need for austerity," Cazeneuve stressed. "And this is the reason why we are very aggressive on the issue of own resources."

"Despite constraints, there is an ambition for the Union's budget," he continued, saying France was open to allocating a share of the upcoming financial transactions tax (FTT) to the EU budget.

Germany wants national contributions to remain

Germany, the largest contributor to the EU budget, sees it differently.

Michael Link, German minister of state, said Berlin's goal remained unchanged, and were aimed at capping the EU's overall spending at 1% of the bloc's Gross National Income (GNI).

On own resources, he was equally clear: "The proposed new capital sources, we do not consider them fit to make the financing of the EU more transparent or safer," Link said as he arrived at the Brussels ministerial meeting on 24 July.

EU diplomats in Brussels confirmed that Berlin would oppose the plans. "The German government sees all these proposals in a very critical way, including ideas like for example using the FTT or other proposals," said one EU diplomat, speaking on condition of anonymity.

Instead, Germany believes "traditional own resources" such as customs duties and agricultural levies, should be preserved and possibly reduced.

Berlin would even like to go further and "delete" the existing VAT component of the own-resources regime, the diplomat added, saying it is too complicated to calculate.

"Everybody wants to delete it," he said, suggesting to replace the current VAT regime by increasing national contributions to the EU budget, arguing that it "would be easier to calculate".

On the FTT, the diplomat said: "The German government is pushing for the introduction of the FTT but not as a new own resource for the EU budget. This is important to differentiate."

The European Commission has proposed increasing the EU budget from the current €976 billion to €1.025 trillion for the next seven-year period, which starts in 2014.

The Commission proposals, tabled in June 2011, suggest a radical break from past budgets, which rely massively on national contributions made by the 27 EU member states.

This time, in a bid to reduce national contributions, the Commission suggested levying new taxes directly.

Options floated by Brussles include an EU VAT, a share of the upcoming EU tax on financial transactions, a charge air transport and a share of auctions from the Emissions Trading Scheme for greenhouse gases.

>> Read full coverage of EU budget negotiations on EURACTIV

  • 30 August: The EU's long-term budget for 2014-2020 will be the sole issue on the agenda at an informal meeting of ministers for European affairs (General Affairs Council). 
  • 24 Sept.: General Affairs Council meeting.
  • 16 Oct.: General Affairs Council meeting.
  • 18-19 Oct.: EU summit.
  • 26 Nov.: General Affairs Council meeting.
  • 10 Dec.: General Affairs Council meeting.
  • 13-14 Dec.: EU summit
  • By end 2012: Negotiations on long-term budget expected to wrap up.

Subscribe to our newsletters