REPORT on Draft amending budget No 4/2006 of the European Union for the financial year 2006

18.9.2006 - (11298/2006 – C6‑0247/2006 – 2006/2149(BUD)) - *

Section III – Commission
Committee on Budgets
Rapporteur: Giovanni Pittella

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on Draft amending budget No 4/2006 of the European Union for the financial year 2006, Section III – Commission

(11298/2006 – C6‑0247/2006 – 2006/2149(BUD))

The European Parliament,

–   having regard to the Treaty establishing the European Community, and in particular Article 272(4), penultimate subparagraph, thereof,

–   having regard to the Treaty establishing the European Atomic Energy Community, and in particular Article 177 thereof,

–   having regard to Council Regulation (EC, Euratom) No 1605/2002 of 27 June 2002 on the Financial Regulation applicable to the general budget of the European Communities[1], and in particular Articles 37 and 38 thereof,

–   having regard to the general budget of the European Union for the financial year 2006, as finally adopted on 15 December 2005[2],

–   having regard to the Interinstitutional Agreement of 6 May 1999 between the European Parliament, the Council and the Commission on budgetary discipline and improvement of the budgetary procedure[3],

–   having regard to Preliminary draft amending budget No 4/2006 of the European Union for the financial year 2006, which the Commission presented on 16 June 2006 (SEC(2006)0760),

–   having regard to Draft amending budget No 4/2006, which the Council established on 17 July 2006 (11298/2006 – C6‑0247/2006),

–   having regard to Rule 69 of and Annex IV to its Rules of Procedure,

–   having regard to the report of the Committee on Budgets (A6‑0284/2006),

A. whereas Draft amending budget No 4/2006 relates to the revenue side of the budget and comprises a number of elements affecting the level of contributions from Member States to the Community's own resources,

B.  whereas these elements relate to the annual revision of the forecasts for traditional own resources, VAT bases, GNI bases and a technical re-calculation of the contributions necessary to finance the UK rebate repayment as well as to the surplus from the Guarantee Fund for external measures from 2005,

C. whereas the Brussels European Council of December 2005 invited the Commission to undertake a full and wide-ranging review of all areas of EU expenditure and revenue, including the British rebate, with a view to presenting a report, accompanied by appropriate proposals, in 2008/2009,

D. whereas in undertaking this review and in drawing up its proposals, the Commission shall take into account the work and recommendations of the European Parliament, in accordance with the terms of Declaration No 3 annexed to the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management[4],

E.  whereas Parliament has entered into a dialogue with the national parliaments with the aim of jointly contributing to this planned comprehensive review of the own resources system in full respect of its established rights,

1.  Approves Draft amending budget No 4/2006 unamended;

2.  Instructs its President to forward this resolution to the Council and Commission.

• [1]  OJ L 248, 16.9.2002, p. 1.
• [2]  OJ L 78, 15.3.2006.
• [3]  OJ C 172, 18.6.1999, p. 1. Agreement as last amended by Decision 2005/708/EC of the European Parliament and of the Council (OJ L 269, 14.10.2005, p. 24).
• [4]  OJ C 139, 14.6.2006, p. 1.

EXPLANATORY STATEMENT

Introduction

Draft amending budget No 4 to the budget for 2006 covers the following points:

· The revision of the forecast of traditional own resources (TOR, i.e. customs duties, agricultural duties and sugar levies), VAT and GNI bases and the budgeting of the relevant UK corrections as well as their financing, resulting in a change in the distribution between Member States of their own resources contributions to the EU budget.

· In addition to the revision of the forecasts of own resources, this DAB enters the surplus in the general budget, at 31 December 2005, from the Guarantee Fund for external measures[1]. This amounts to EUR 92 730 000 and reduces the Member States' contributions of own resources based on GNI accordingly.

Revision of the forecast of TOR, VAT and GNI bases

The forecast agreed in May 2006 has been revised as follows:

– The total forecast of 2006 net agricultural duties is nearly unchanged at EUR 763.4 million (after deduction of 25 % in collection costs), only the breakdown of this total forecast between Member States has been updated.

–  The total forecast of 2006 net sugar levies was dramatically reduced from EUR 556.2 million to EUR 150.6 million (after deduction of 25 % in collection costs), following a reduction of the production forecast and lower export refunds (reducing the total forecast from EUR 556.2 million down to EUR 245.4 million), as well as a postponement of the deadline for 2006 balance payments from 15.12.2006 to 15.4.2007. This means that out of the new total of EUR 245.4 million an instalment of EUR 150.6 million shall be paid in 2006 while a balance of EUR 94.8 million shall be paid and budgeted in 2007.

–  Total 2006 net customs duties are now forecast at EUR 13 874.9 million (after deduction of 25 % in collection costs), which represents an increase by + 7.5 % relative to the April 2005 forecast of EUR 12 905.4 million.

– The total 2006 EU GNI base is forecast at EUR 11 126 054.4 million, which represents a slight increase by + 0.36 % as compared to the April 2005 forecast of EUR 11 086 088.0 million.

– The total 2006 EU uncapped VAT base is now forecast at EUR 5 276 515.9 million, which represents a slight decrease of - 0.93 % as compared to the April 2005 forecast of EUR 5 326 182.1 million. The total 2006 EU capped VAT base[2] is forecast at EUR 5 105 867.8 million, which represents a slight decrease of - 0.51 % as compared to the April 2005 forecast of EUR 5 132 126.45 million.

1^st update of the 2005 UK correction, 2^nd update of the 2004 UK correction and definitive amount of the 2002 UK correction

The correction of budgetary imbalances in favour of the United Kingdom (UK correction) to be budgeted in the present amending budget concerns three years: 2002, 2004 and 2005[3]. As the UK correction of a certain year is to be financed in the following year, all 25 Member States participate in the financing of the 2004 and 2005 UK correction. The financing of the 2002 UK correction does, however, only concern the 15 countries that were Member States in 2003.

In the present DAB, the calculation and financing of the 1^st update of the 2005 UK correction, the 2^nd update of the 2004 UK correction as well as of the definitive amount of the 2002 UK correction are entered into the 2006 budget:

· The 1^st update of the 2005 UK correction is EUR 846.5 million lower as compared to the provisional amount of the 2005 UK correction entered in the budget 2006.

· The 2^nd update of the 2004 UK correction is EUR 239.7 million higher as compared to the 1^st update of the 2004 UK correction entered in the AB 5/2005.

· The definitive amount of the 2002 UK correction is EUR 124.4 million higher compared to the 1^st update of the 2002 UK correction entered in the AB 4/2003.

Appreciation

It should be noted that the contents of this amending budget are of a technical nature and do not really prompt any specific action from the Parliament's side. The rapporteur would therefore suggest to approve the Council's document without amendments and thus conclude the procedure in first reading.

However, on this occasion and in the face of a budgetary correction for only one Member State which, according to the current amending budget, has amounted to EUR 5.6 billion in 2002 and to an estimated EUR 5.4 billion in 2004 and EUR 4.8 billion in 2005, the rapporteur would like to stress that he considers the current system of correction of budgetary imbalances in favour of one Member State completely intransparent and outdated.

The latest Commission proposal (COM(2006)099 of 20.3.2006) does little to change this unsatisfactory state. In principle, it leaves the UK correction intact (except for expenditure in the new Member States) and introduces even additional exceptions establishing reduced own resources payments for specific Member States suffering from excessive budgetary burdens.

The rapporteur hopes that the review of the own resources system due to take place before 2008 / 2009 will finally lead to a system which is equitable, transparent, cost-effective and simple. According to Declaration No 3 on the review of the financial framework, annexed to the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management, the European Parliament will be fully associated with this wide-ranging review. Preparatory work conducted jointly by the EP and the national parliaments has already begun. You rapporteur would wish for a future solution aiming at a fair treatment of Member States which have a similar capacity to contribute to the EU budget.

• [1]  Article 7 of Council Decision 2000/597/EC, Euratom on the system of the European Communities' own resources states that " …surplus from the Guarantee Fund arising from external measures, transferred to the revenue account in the budget, shall be regarded as constituting own resources ".
• [2]  In accordance with Council Decision No 2000/597/EC, Euratom; if the VAT base of a Member State exceeds 50 % of its GNI, then it is capped at these 50 %. For the PDAB 4/2006, 10 Member States will have their VAT base capped at 50 % of GNI: the Czech Republic, Estonia, Greece, Spain, Ireland, Cyprus, Luxembourg, Malta, Portugal and Slovenia.
• [3]  As far as the 2003 UK correction is concerned, the Commission shall – according to the 2000 Calculation Method – propose to budget an update if it differs significantly from the corresponding previously budgeted calculation. According to the Commission’s current calculations, the amount of the 2003 UK correction does not differ significantly from the 1^st update of the 2003 UK correction entered in the AB 8/2004. Consequently, an update is not proposed for budgeting in the present PDAB 4/2006.

PROCEDURE

Title	Draft amending budget No 4/2006 of the European Union for the financial year 2006
References	11298/2006 – C6-0247/2006 – 2006/2149(BUD)
Legal basis	Articles 272 EC and 177 Euratom
Basis in Rules of Procedure	Rule 69 and Annex IV
Committee responsible          Date of referral	BUDG 5.9.2006
Committee(s) asked for opinion(s)          Date of referral
Rapporteur   Date appointed	Giovanni Pittella 6.12.2004
Previous rapporteur	Salvador Garriga Polledo
Preliminary draft amending budget                Date presented by Commission	No 4/2006 – SEC(2006)0760 16.6.2006
Date draft amending budget established by the Council	17.7.2006
Date draft amending budget forwarded by the Council	18.7.2006
Discussed in committee	12.9.2006
Date adopted	12.9.2006
Result of final vote	for: 15 against: 0 abstentions: 0
Members present for the final vote	Gérard Deprez, Brigitte Douay, Hynek Fajmon, Szabolcs Fazakas, Ingeborg Gräßle, Louis Grech, Nathalie Griesbeck, Catherine Guy-Quint, Jutta D. Haug, Ville Itälä, Anne E. Jensen, Janusz Lewandowski, Vladimír Maňka, Giovanni Pittella, Esko Seppänen
Substitutes present for the final vote
Substitutes under Rule 178(2) present for the final vote
Date tabled	18.9.2006
Comments (available in one language only)	...