- “Own Resources” proposals were due in June, according to binding Interinstitutional Agreement of 2020
- New income needed to cover repayment of “NextGenerationEU” borrowing
- Delay undermines balance and architecture of the financing of the recovery package
Budget MEPs said that the Commission is in breach of the 2020 Interinstitutional Agreement which prescribes proposing three new EU sources of income by June 2021.
Commissioner for Budget Johannes Hahn, in a debate on Tuesday with Members of Parliament’s Committee on Budgets, said that the Commission had put on hold its work on a new digital levy as a new Own Resource for the Union budget (and as a consequence delaying the package including 2 other new Own Resources) in the aftermath of a long-awaited agreement on OECD/G20 level on the reform of international taxation in July, which should be finalised by October.
The Chair of the Committee on Budgets Johan Van Overtveldt said: “Parliament was disappointed when the Commission failed to present legislative proposals for new Own Resources in the first half of the year. The digital levy in the meantime has been put on ice because of the OECD negotiations and under some not too subtle pressure from the United States” (Watch the quote on video).
Commission was under legal obligation to submit proposals by June
A large majority of MEPs found that the Commission is in breach of the Interinstitutional Agreement of December 2020, which contains a legally binding roadmap towards the introduction of new own resources, according to which the Commission must put forward, by June 2021, a proposal to introduce three new own resources: a carbon border adjustment mechanism (CBAM), a digital levy and an own resource based on a reviewed Emissions Trading System (ETS).
The protection of the EU budget is at stake, said the MEPs, underlining that without new Own Resources there are not sufficient funds to repay the borrowing for the “NextGenerationEU” recovery plan without increasing national contributions to the EU budget or at worst, cutting future EU budgets. They insisted that the Commission should not be a hostage of OECD/G20 negotiations.
Commissioner Hahn promised the MEPs that “after the G20 meeting in October we will make a proposal no matter if there is an agreement or not”. He confirmed that the whole package of three new Own Resources is needed in order to generate sufficient funds.
As part of its 'Fit for 55' package presented on 14 July 2021, the Commission submitted proposals for a revised ETS directive and the introduction of a Carbon Border Adjustment Mechanism. However, and against the general expectations, the Commission did not accompany these initiatives with a proposal for a new own resources decision. The initiative for a digital levy as an own resource has also been withdrawn. The absence of such proposals calls into question the viability of the Roadmap for the introduction of new own resources as provided for in the lnterinstitutional Agreement of 16 December 2020.