1. Lump-sum tax as EU Own Resource
‘FISCAL EU’: FAIR, SUSTAINABLE AND COORDINATED TAX AND SOCIAL POLICIES
An international research consortium working on alternative tax policies and new fiscal models for building the future of EU
Lump-sum tax as EU Own Resource
Marian Dobranschi, Danuse Nerudova and Veronika Solilova
The project is funded by the European Union’s Horizon 2020 research and innovation programme , grant agreement No. FairTax

2. The concept of Lump-sum tax
Hindricks and Myles (2004) the idealized redistribution instrument to compare with current direct and indirect taxes
Graaf (2008) theoretically the most efficient and costless tax
Rothbard (2006) simple to impose and collect
Hillman (2009) – the zero excess burden tax, no deadweight loss and no substitution effect
Gans et. al. (2014) – non-distortionary per capita tax

3. Potential contribution of EU lump-sum tax to close sustainability gaps in the EU
How can EU lump-sum tax contribute to sustainability-oriented taxation in the EU?
Current sustainability gaps of taxation in the EU
High and increasing weight on labor taxation
Decreasing progressivity of tax system – increasing regressivity and weak power of redistribution
Increasing the importance of corrective taxation
Decreasing the company tax competition
Increasing tax compliance and reducing the tax fraud

4. Table no.1 The EU lump-sum tax revenues potential estimation using 2014 level of population
Ls (1 Euro)
Ls (1 Euro Cent/day)
Ls (5 Euro)
Ls (10 Euro)
Ls (100 Euro)
Million
Mil. Euro
EU (28 countries)
506.94
Belgium
11.20
40.89
56.02
112.04
Bulgaria
7.25
26.45
36.23
72.46
724.57
Czech Republic
10.51
38.37
52.56
105.12
Denmark
5.63
20.54
28.14
56.27
562.72
Germany
80.77
294.80
403.84
807.67
Estonia
1.32
4.80
6.58
13.16
131.58
Ireland
4.61
16.81
23.03
46.06
460.55
Greece
10.93
39.88
54.63
109.27
Spain
46.51
169.77
232.56
465.12
France
65.89
240.50
329.45
658.89
Croatia
4.25
15.50
21.23
42.47
424.68
Italy
60.78
221.86
303.91
607.83
Cyprus
0.86
3.13
4.29
8.58
85.80
Latvia
2.00
7.31
10.01
20.01
200.15
Lithuania
2.94
10.74
14.72
29.43
294.35
Luxembourg
0.55
2.01
2.75
5.50
54.97
Hungary
9.88
36.05
49.39
98.77
987.74
Malta
0.43
1.55
2.13
42.54
Netherlands
16.83
61.43
84.15
168.29
Austria
8.51
31.05
42.53
85.07
850.69
Poland
38.02
138.77
190.09
380.18
Portugal
10.43
38.06
52.14
104.27
Romania
19.95
72.81
99.74
199.47
Slovenia
2.06
7.52
10.31
20.61
206.11
Slovakia
5.42
19.77
27.08
54.16
541.59
Finland
5.45
19.90
27.26
54.51
545.13
Sweden
9.64
35.20
48.22
96.45
964.49
United Kingdom
64.35
234.88
321.76
643.51

5. Table no. 2. The comparison between lump-sum potential and the EU budget from 2014
EU-28
EU Budget
2014
Lump-sum Tax Replace
Ls (1 Euro)
Ls (1 Euro Cent/day)
Ls (5 Euro)
Ls (10 Euro)
Ls (100 Euro)
Bil. Euro
0.51
1.85
2.53
5.07
50.69
Euro %
VAT-based own resource
17.67
34.85
2.87
10.47
14.35
28.69
286.94
GNI-based own resource
99.08
195.44
1.87
2.56
5.12
51.17
Traditional own resources (TOR) (75%)
16.43
32.41
3.09
11.26
15.43
30.86
308.56
Customs duties (100%)
22.00
43.39
2.30
8.41
11.52
23.04
230.45
Amounts (25%) retained as TOR collection costs (-)
5.54
10.93
9.15
33.38
45.73
91.45
914.52
Other revenue
9.97
19.67
5.08
18.55
25.41
50.83
508.30
Gross National Income (GNI)
139.22
274.62
0.36
1.33
1.82
3.64
36.41
TOTAL own resources
132.96
262.28
0.38
1.39
1.91
3.81
38.13
TOTAL national contribution
116.53
229.87
0.44
1.59
2.18
4.35
43.50
TOTAL REVENUE
143.94
283.94
0.35
1.29
1.76
3.52
35.22
TOTAL EU EXPENDITURE
128.56
253.61
0.39
1.44
1.97
3.94
39.43
TOTAL Expenditure
142.50
281.09
1.30
1.78
3.56
35.58
Surplus from previous year
1.01
n/a

6. Table no. 3 The lump-sum tax potential applied on EU citizens and non-EU resident tourists in 2014
GEO/TIME
Non-EU tourists
EU Population
Ls (1 Euro)
Ls (5 Euro)
Ls (10 Euro)
Ls (100 Euro)
Million
Mil. Euro
European Union (28)
338.80
506.94
845.74
Belgium
7.89
11.20
19.09
95.46
190.91
Bulgaria
2.79
7.25
10.04
50.19
100.37
Czech Republic
8.10
10.51
18.61
93.04
186.08
Denmark
2.47
5.63
8.09
40.46
80.93
809.27
Germany
32.86
80.77
113.63
568.14
Estonia
1.98
1.32
3.30
16.50
32.99
329.91
Ireland
2.24
4.61
6.85
34.24
68.48
684.83
Greece
14.40
10.93
25.33
126.64
253.29
Spain
52.36
46.51
98.87
494.36
988.71
France
46.07
65.89
111.96
559.82
Croatia
11.44
4.25
15.69
78.43
156.86
Italy
51.64
60.78
112.42
562.09
Cyprus
1.94
0.86
13.97
27.94
279.36
Latvia
1.43
2.00
3.43
17.16
34.33
343.25
Lithuania
1.36
2.94
4.30
21.50
43.00
430.03
Luxembourg
1.04
0.55
1.59
7.94
15.88
158.82
Hungary
4.62
9.88
14.50
72.48
144.95
Malta
1.40
0.43
1.82
9.12
18.25
182.47
Netherlands
13.92
16.83
30.75
153.77
307.54
Austria
22.25
8.51
307.53
Poland
5.47
38.02
43.49
217.44
434.88
Portugal
9.69
10.43
20.12
100.58
201.16
Romania
1.91
19.95
21.86
109.30
218.59
Slovenia
2.37
2.06
4.44
22.18
44.35
443.51
Slovakia
1.46
5.42
6.88
34.38
68.76
687.59
Finland
2.73
5.45
8.18
40.91
81.83
818.25
Sweden
5.46
9.64
15.10
75.50
151.00
United Kingdom
21.85
64.35
86.20
431.02
862.05

7. Table no. 4. The comparison between lump-sum potential (applied on EU citizens and non-EU tourists) and the EU budget from 2014
Lump-sum tax
Replace
Ls(1 Euro)
Ls (5 Euro)
Ls (10 Euro)
Ls (100 Euro)
EU-28
Bil. Euro
0.85
4.23
8.46
84.57
Euro %
VAT-based own resource
17.67
20.89
4.79
23.94
47.87
478.70
GNI-based own resource
99.08
117.15
4.27
8.54
85.36
Traditional own resources (TOR) (75%)
16.43
19.43
5.15
25.74
51.48
514.77
Customs duties (100%)
22.00
26.01
3.84
19.22
38.45
384.46
Amounts (25%) retained as TOR collection costs (-)
5.54
6.55
15.26
76.28
152.57
Other revenue
9.97
11.79
8.48
42.40
84.80
848.00
Gross National Income (GNI)
139.22
164.61
0.61
3.04
6.07
60.75
TOTAL own resources
132.96
157.21
0.64
3.18
6.36
63.61
TOTAL national contribution
116.53
137.79
0.73
3.63
7.26
72.58
TOTAL REVENUE
143.94
170.19
0.59
2.94
5.88
58.76
TOTAL EU EXPENDITURE
128.56
152.01
0.66
3.29
6.58
65.78
TOTAL Expenditure
142.50
168.49
0.58
2.97
5.94
59.35
Surplus from previous year
1.01
n/a

8. Conclusions
Applicability of Lump-sum tax: low and affordable tax rate, efficient, broad tax base, horizontal equitable.
In-applicability of Lump-sum tax: regressive, no vertical equity, unfair, politically difficult to enact, unpopular, tax administration costs when the tax rate is too low. There is an inseparable relationship between efficiency and equity.
Lump-sum tax as EU Own resource cannot fully replace the current system of resources, but can constitute an additional (complementary) source of EU budget, along more viable taxes: FTT, CCCTB, Pigovian taxes.