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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
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What we will look at
• Income sources
• Correction Mechanisms
• Alternative Income Sources
Quaker Council for European Affairs – A Quaker Voice in Europe
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VAT - RatesRates of Basic Rate VAT in EU MS
0
5
10
15
20
25
30
Denm
ark
Swed
en
Finla
nd
Poland
Belgiu
m
Irela
nd
Portugal
Austria
Bulgar
ia
Hungar
yIta
ly
France
Czech
Repu
blic
Ger
man
y
Gre
ece
Nether
lands
Romani
a
Slova
kia
Estonia
Latvi
a
Mal
ta UK
Spain
Cypru
s
Lithuan
ia
Portugue
se Is
lands
Gre
ek Is
land
s
Spanis
h Isla
nds - C
anar
y
Per
cen
t
Quaker Council for European Affairs – A Quaker Voice in Europe
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VAT – How many ratesNumber of
RatesCountries
6 Greece, 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
5 Lithuania
4 Ireland, Italy, Poland
3 Austria, Belgium, Bulgaria, Finland, France, theNetherlands, Sweden, UK
2 Cyprus, Czech Republic, Estonia, Germany, Hungary,
Latvia, Malta, Romania, Slovakia
1 Denmark
Quaker Council for European Affairs – A Quaker Voice in Europe
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GNI
• Why GNI and not GDP?
• Flaws of GDP
• Is it an ‘own resource’?
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What does it all cost?
EU B as Budget as Percentage of GNI
0.96%
0.98%
1.00%
1.02%
1.04%
1.06%
1.08%
1.10%
1.12%
2007 2008 2009 2010 2011 2012 2013
Quaker Council for European Affairs – A Quaker Voice in Europe
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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
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What does it all cost?Net contribution/ benefit per head of population
-200.00
-100.00
0.00
100.00
200.00
300.00
400.00
500.00
Net
herlan
ds
Swed
en
Den
mar
k
Ger
man
y
Belg
ium
Luxe
mbo
urg
Fran
ce
Finl
and
Aus
tria
Uni
ted
Kin
gdom
I tal
y
Czec
h Rep
ublic
Slov
akia
Slov
enia
Pola
nd
Spai
n
Hun
gary
Latv
ia
Cypr
us
Esto
nia
Lith
uani
a
Portug
al
Mal
ta
I rel
and
Gre
ece
Quaker Council for European Affairs – A Quaker Voice in Europe
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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
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Who pays and who gains?
• Net Recipients 1997 to 2006– Ireland– Portugal– Greece– Spain
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New Member StatesNew Member States - Net Revenue from EU 2004 to 2006
0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0 3,500.0
2004
2005
2006
Malta Cyprus Slovenia Estonia Latvia Slovakia Czech Republic Lithuania Hungary Poland
Quaker Council for European Affairs – A Quaker Voice in Europe
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What is fair?Comparison between purchasing power and net contribution/ receipt - 2006
-200
-100
0
100
200
300
400
500
600
700
Luxe
mbo
urg
I rel
and
Denm
ark
Nethe
rland
s
Austria
Belg
ium
Unite
d Kin
gdom
Finl
and
Swed
en
Germ
any
Fran
ceI t
aly
Spai
n
Cypr
us
Greec
e
Slov
enia
Czec
h Rep
ublic
Portug
al
Mal
ta
Esto
nia
Hunga
ry
Slov
akia
Lith
uani
a
Latv
ia
Pola
nd
Purchasing Power Net contribution/receipt per head of population
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Corrective Measures?
• UK Rebate and how it is financed – two different issues
Quaker Council for European Affairs – A Quaker Voice in Europe
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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 3rd highest net contributor (total)• UK 10th highest net contributor (per capita)
Quaker Council for European Affairs – A Quaker Voice in Europe
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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
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Alternative Sources of Income
Principles
• Based on EU values• Transparency• Based on EU priorities• Link to citizens – accountability
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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
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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
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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
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Principles
Tax
Simple Buoyant
Broad 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 taxes Depends on specifics
Depends on specifics
Depends on specifics
Depends on specifics
Depends on specifics
Communication Tax
No - regressive
Corporate Tax
Depends on rate
Personal Income Tax
Could be
Savings Tax Depends on specifics
Could be