1. Session 3 A - Is there a need to reform the Own Resource System?
Dirk H. Kranen
Head of Division - Federal Ministry of Finance Germany

2. Is there a need to reform the Own Resource System?
Positive aspects of the current system:
EU-Budget is fully financed – No deficit!
European Parliament and European Council have equal rights in deciding on the annual EU-budget – No lack of democratic control!
Member States have the obligation to finance all EU-expenditures – No dependency on national decisions!
GNI-Own resources reflect the differences in economic strength of different Member States – Fairness!

3. “Problems” of the current own resource System
It makes the negotiations for the budget complex and driven by national interests.
It makes the financing of the budget difficult to understand for people and businesses.
It gives rise to a complex system of national rebates.
Kristalina Georgieva
Vice-President of the Commission
September, 7th, 2016

4. Net balances thinking – Fact check1.
“It makes the negotiations for the budget complex and driven by national interests.”
Budget negotiations are always complex. Every national budget or municipal budget is the outcome of complex negotiations.
Common pool problem would persist. Alternative financing cannot change it.

5. Difficult to understand – Fact check2.
“It makes the financing of the budget difficult to understand for people and businesses.”
Is there a need to understand the financing of the budget?
GNI-own resources indicates a strong relation of national income and

6. Complex rebates – Fact check3.
“It gives rise to a complex system of national rebates.”
Rebates are corrections on the income side.
Alternative: Spend even more!
Or: Spend only on goods with High European Public Value

7. Misconceptions
EU tax is necessary to provide more money for Europe. - wrong
The current own resource system is not democratic since the European Parliament has only a little say in own resource decisions. - wrong
It is not transparent for European citizens. - wrong

8. Real underlying intention
Call for reform of EU-own resource system is not a call for more transparency or less net-balance thinking.
It is a call for substantial more power of the EU-Level:
the power to levy taxes

9. Research Project: Future of EU-Finances
Ignite economic research in the field of the own resource system
10 economists covered several topics:
Legal restrictions
Principle of subsidarity
EU-Budget as automatic stabilizer
Political economy of EU-Financing
Transport Fuel Tax, Electricity Tax
How to reform the EU-Budget

10. Research Project: Main findings
Current own resource system works well. No financing problem of the union.
Netbalance thinking is not rooted in the own resource system. Wrong priorities in the EU-Budget, namely the replacement of national spending by EU-spending, is the real reason for net balance thinking. Common pool problem: Every country tries to get out of the budget as much as it can.
GNI own resources is a automatic stabilizer.

11. Research Project: Main findings
Current own resource system is in line with the principle of subsidiarity.
EU-taxes would create nen problems, especially redistribution problems
Current discussion to reform the own resource system is not about the own resource system. It is about a power shift between the national and the EU-level.

12. German position Current own resource system serves its purpose well.
The system should be kept but reformed.
Abolishing of the VAT-own resource
GNI-own resource should be recognized as fair and best own resource
Medium objectives: No rebates necessary

13. Germany’s proposals to reform the EU-Budget
European money should be spent on things that deliver a clear European added value.
EU’s budget should support the respective Member States to implement their country-specific economic policy recommendations.
More flexibility of the European budget

14. Thank you Speech of Dr. Wolfgang Schäuble
Fi­nal re­port on the re­search project on the fu­ture of EU fi­nances