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Tax-based EU own resources: an assessment


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  • Philippe Cattoir

    (European Commission)


The ongoing intergovernmental conference (IGC) and the preparation of the "Financial Perspectives post-2006" i.e. the next multi-annual financial framework of the European Union, have led to new discussions on the issue of EU own taxes. As this issue is also likely to emerge regularly in future debates, it is useful to present a structured analysis of some of the pros and cons of giving taxing powers to the Union. Such an analysis has already been made in the past, notably in Agenda 2000, which presented the European Commission's position concerning the EU financial framework for the period 2000-2006. Several possibilities for a "genuine" or tax-based own resource (?EU tax?) were presented and assessed in Agenda 2000. However, that analysis requires revision and updating to take account of the considerable evolution of EU objectives and policies in recent years and to include an assessment of new possibilities, such as, for instance, a climate charge on aviation emissions. Eight criteria are applied to nine main candidates for EU taxation and comparisons are made with regard to these criteria. One of the main conclusions that can be drawn from this multi-criteria analysis is that there is no such thing as a perfect tax for the EU. All the main candidates that have been suggested for EU taxes have some pros and some cons. The inability of proposed EU taxes to meet fully certain criteria should not lead to the conclusion that these taxes should be dismissed, as has sometimes been argued in the past. On the contrary, the analysis presented here highlights the fact that the choice between one or several EU taxes would critically depend on a political choice as to which criteria should be considered essential and which secondary. Furthermore, an assessment of a tax as a possible candidate should ultimately have regard to its impact on the functioning of the overall financing system of the EU.

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Bibliographic Info

Paper provided by Directorate General Taxation and Customs Union, European Commission in its series Taxation Papers with number 1.

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Length: 47 pages
Date of creation: Apr 2004
Date of revision: Apr 2004
Handle: RePEc:tax:taxpap:0001

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Keywords: European Union; taxation; budget; own resources; VAT; CIT;

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Cited by:
  1. Maciej Cieslukowski & Rui Henrique Alves, 2006. "Financial Autonomy of the European Union after Enlargement," FEP Working Papers 217, Universidade do Porto, Faculdade de Economia do Porto.
  2. Friedrich Heinemann & Philipp Mohl & Steffen Osterloh, 2009. "Who’s afraid of an EU tax and why?—revenue system preferences in the European Parliament," The Review of International Organizations, Springer, vol. 4(1), pages 73-99, March.
  3. Henrik Enderlein & Iain Begg & Mojmir Mrak & Jacques Le Cacheux, 2008. "Financing of the European Union Budget," Sciences Po publications Contract No 30-CE-0122101, Sciences Po.


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