Quaker Council for European Affairs – A Quaker Voice in Europe The European Union Budget Overview and Income

Quaker Council for European Affairs – A Quaker Voice in Europe 2 What we will look at Income sources Correction Mechanisms Alternative Income Sources

Quaker Council for European Affairs – A Quaker Voice in Europe 3 Income

Quaker Council for European Affairs – A Quaker Voice in Europe 4 VAT - Rates

Quaker Council for European Affairs – A Quaker Voice in Europe 5 VAT – How many rates Number of RatesCountries 6Greece, Portugal, Spain (NB: each of them have three rates on the mainland and 3 different rates for their Islands – in Spain the Island rates apply in the Canary Islands but not in the Balearics 5Lithuania 4Ireland, Italy, Poland 3Austria, Belgium, Bulgaria, Finland, France, the Netherlands, Sweden, UK 2Cyprus, Czech Republic, Estonia, Germany, Hungary, Latvia, Malta, Romania, Slovakia 1Denmark

Quaker Council for European Affairs – A Quaker Voice in Europe 6 GNI Why GNI and not GDP? Flaws of GDP Is it an ‘own resource’?

Quaker Council for European Affairs – A Quaker Voice in Europe 7 Income

Quaker Council for European Affairs – A Quaker Voice in Europe 8 What does it all cost?

Quaker Council for European Affairs – A Quaker Voice in Europe 9 Who pays and who gains? Flows from each country to EU Flows from EU to each country Is it a relevant question?

Quaker Council for European Affairs – A Quaker Voice in Europe 10 What does it all cost?

Quaker Council for European Affairs – A Quaker Voice in Europe 11 Who pays and who gains Net contributors 1997 to 2006 –Germany –Netherlands –United Kingdom –France –Italy –Sweden –Belgium –Austria –Denmark –Luxembourg –Finland

Quaker Council for European Affairs – A Quaker Voice in Europe 12 Who pays and who gains? Net Recipients 1997 to 2006 –Ireland –Portugal –Greece –Spain

Quaker Council for European Affairs – A Quaker Voice in Europe 13 New Member States

Quaker Council for European Affairs – A Quaker Voice in Europe 14 What is fair?

Quaker Council for European Affairs – A Quaker Voice in Europe 15 Corrective Measures? UK Rebate and how it is financed – two different issues

Quaker Council for European Affairs – A Quaker Voice in Europe 16 Corrective Measures Why a UK Rebate? Small agricultural sector (comparatively) High VAT base High net contributor Rebate = € 4.6 bn average per annum UK contribution after rebate = € 2 bn pa UK 3 rd highest net contributor (total) UK 10 th highest net contributor (per capita)

Quaker Council for European Affairs – A Quaker Voice in Europe 17 How is it financed?

Quaker Council for European Affairs – A Quaker Voice in Europe 18 What has changed? Rebate in place since 1982 CAP now smaller part of budget VAT now smaller part of income calculation New Member States – different balance of economic power UK economy very strong Rebate predated German reunification

Quaker Council for European Affairs – A Quaker Voice in Europe 19 Alternative Sources of Income Principles Based on EU values Transparency Based on EU priorities Link to citizens – accountability

Quaker Council for European Affairs – A Quaker Voice in Europe 20 More of the same? Keep current own resources Increase the share of VAT that goes to the EU Top up with a GNI based formula

Quaker Council for European Affairs – A Quaker Voice in Europe 21 Something new – an EU Tax? Principles of good taxation: simple and transparent buoyant broad based low marginal rate It should deliver ‘horizontal equity’ It should deliver ‘vertical equity’

Quaker Council for European Affairs – A Quaker Voice in Europe 22 Something new – an EU Tax? Issues at EU level with national taxation: Horizontal tax competition. Vertical tax competition Can distort investment decisions Can distort decisions on location of employment Can distort shopping decisions especially in border regions

Quaker Council for European Affairs – A Quaker Voice in Europe 23 Principles Tax SimpleBuoyantBroad Base Low Marginal Rate Horizontal Equity Vertical Equity VAT  Depends on rate  No - regressive Excise Duty  Depends on other policies  Depends on rate  No - regressive Eco taxesDepends on specifics  Communication Tax  No - regressive Corporate Tax  Depends on rate  Personal Income Tax  Could be  Savings TaxDepends on specifics  Could be 