Eastern Europe asked to raise EU budget payouts

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Member states benefiting from redistributive policies like Eastern European countries should contribute more to the EU budget, according to draft European Commission proposals seen by EURACTIV.

In an apparent effort to address demands from countries requesting a return on their investment (the principle of ‘juste retour‘), the draft proposes increasing contributions from countries benefiting from regional funding. 

“Member states benefiting from redistributive policies – such as the cohesion policy – going to poorer regions must pay increased contributions to the EU budget to finance correction mechanisms,” the draft reads. 

Noting that the issue of ‘juste retour‘ is “poisoning” every debate on the EU budget, the draft points out that countries tend to favour instruments with geographically pre-allocated financial envelopes as a result, rather than those which may warrant greater added value. 

Introducing an EU tax? 

At present, it is almost impossible for EU citizens to ascertain who effectively bears the cost of the EU budget, the paper reads. In particular, the VAT-based resource is considered to be “complex to the point of incomprehensibility”. 

Therefore, the Commission proposes eliminating the VAT-based own resource and suggests introducing “a genuine new resource” instead. This new resource is seen as key to solving the ‘just retour‘ dilemma, which is linked to achieving EU policy priorities that are cross-border in nature. 

Although the paper stops short of calling the new resource a European tax, payable by all citizens, the notion of a tax can be seen in dotted lines in a sentence arguing that the EU’s reformed finances “should not increase the overall tax burden for the EU citizen”. 

End of UK rebate 

The paper calls for a progressive phasing out of all correction mechanisms, and in this context states that the justification for the UK correction mechanism, negotiated in 1984 by Margaret Thatcher, would “disappear progressively”. 

The draft explains that ‘juste retour‘ considerations have recently prompted ideas such as extending the rebate system to all member countries. Instead, the Commission proposes the abolition of all correction mechanisms. 

European Commission President José Manuel Barroso opened a 'no-taboos' debate on the EU's future spending priorities in a public consultation launched in 2007 (EURACTIV 13/09/07). 

The size, structure and priorities of the EU's annual spending - which amounted to €126.5 billion in 2007 - is governed by the Financial Perspectives (see EURACTIV LinksDossier), which were agreed after long and fierce discussions in 2006 and cover the period 2007-2013. 

At the same time, EU heads of state and government agreed to a review, to take place in 2008-2009, in order to evaluate the political priorities in the budget guidelines. 

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