**EU States Seek Compromise on New Taxes to Fund Next Budget**
As the European Union prepares for its next long-term budget, member states are actively discussing potential new taxes to generate revenue. The Irish presidency of the EU Council is leading these negotiations, urging member countries to identify acceptable levels of revenue from new "own resources" and to outline the changes necessary for their support.
A recent note circulated by the Irish presidency highlights a general consensus among EU countries regarding the need for additional revenue sources. However, significant divisions persist over which specific taxes should be implemented and the revenue expectations associated with them.
The European Commission has put forward a proposal that includes five potential new revenue sources for the EU budget covering the period from 2028 to 2034. These proposed sources are:
1. **Emissions Trading System (ETS)** - A market-based approach to controlling pollution by providing economic incentives for reducing emissions.
2. **Carbon Border Adjustment Mechanism** - A tariff on imports based on their carbon emissions, aimed at preventing carbon leakage and encouraging greener practices.
3. **Non-collected electronic waste** - A proposal to generate revenue from the management and recycling of electronic waste.
4. **Tobacco excise duties** - Increased taxes on tobacco products to discourage use and generate funds.
5. **Contribution from large companies** - A proposed tax on large corporations, particularly those that benefit significantly from the EU market.
The European Commission estimates that these measures could yield billions of euros annually for the EU budget. Among the proposals, the carbon border mechanism appears to have gained a relatively broad base of support from member states. Conversely, there are considerable concerns regarding the proposed corporate contribution and the revenue from tobacco-related taxes.
These discussions are part of a broader initiative to finance the EU's upcoming seven-year budget while minimizing the financial burden on national contributions from member states. The proposed new own resources are also intended to support EU priorities and assist in repaying debts incurred during the NextGenerationEU recovery program, which was established in response to the economic fallout from the COVID-19 pandemic.
The negotiations surrounding these new revenue sources are politically sensitive, as any decisions require unanimous agreement among all member states. Following this, each country must ratify the decisions according to its constitutional processes. Additionally, the European Parliament must be consulted on the proposals.
The Irish presidency is expected to draft a new compromise text in the coming weeks, aiming to bridge the gaps between member states' positions. This issue is scheduled to return to the General Affairs Council on September 22, where it will be further discussed in preparation for an EU leaders' meeting planned for October.
As these discussions unfold, the outcome will play a crucial role in shaping the financial landscape of the EU for the coming years, impacting various sectors and initiatives across member states. The focus remains on achieving a balanced approach that addresses the diverse economic realities of the EU while fostering sustainable growth and recovery.