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Reforming the system of financing the EU budget

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In the framework of the adoption of a new Multiannual Financial Framework (MFF) for the period 2014-2020, the European Commission has come forward with an ambitious proposal introducing new “genuine” own resources to finance the EU budget, modifying the current correction mechanisms via a system of lump-sums, and reducing the collection costs on the proceeds from Traditional Own Resources. The proposal has retained two new “genuine” own resources, namely a new Value Added Tax-based resource and a Financial Transaction Tax (FTT)-based resource. Although the different elements of this proposal are likely to be difficult to adopt politically, the present paper aims to analyse each of them so as to understand how they could improve the current system.

Working Paper European Affairs Programme.
(Photo credit: Tax Credits, Flickr)