Europe’s Socialists and Democrats want a “drastic change” in the debate on revision of the EU budget. Their views are presented in a framework document that calls for an increase in the ceiling of the financial perspectives, rejects any renationalisation of existing policies and addresses the question of European taxes.

The S&D group adopted unanimously, in June, four texts on the Common Agricultural Policy (CAP), fisheries policy, territorial cohesion policy and the future budgetary objectives, with the latter theme serving as an overall introduction. This initiative is in keeping with the context of the ongoing economic crisis and next autumn’s launch of debate on reform of the EU budget with the European Commission’s publication, in September, of a guidance document followed in spring 2011 by formal proposals with figures.

HIGHER CEILING

The Socialists’ document begins with the short term, calling on the EU executive to present an upward revision of the existing financial framework 2007-2013 because its margins are far too tight. Funds should be allocated for implementing Lisbon provisions and the EU’s new competences and to close gaps under Headings 1a (competitiveness) and 4 (EU in the world). For the Socialist coordinator of the Committee on Budgets (BUDG), Swedish national Göran Färm, it is pointless to set up the 2020 strategy, the External Action Service and the ITER fusion reactor project (€1.4 billion) if these actions are not given additional resources.

For post-2013, the group is “aware” that many member states wish to address the question of the European budget from a “restrictive” approach, highlighting the shortage of public funds and the need for savings measures and the reduction of national deficits. However, the Socialists consider that a method based solely on cuts and austerity plans is “too simple” and will not work. They urge the Council and Commission to “bring the EU budget out of an impasse” by raising its overall volume to the existing ceiling for own resources (1.23% of the Union’s gross national income, compared to barely 1% at present). As Stéphane Le Foll (France) explains, this would allow a gain of another €50 billion whereas today’s EU budget is “slightly below the French government deficit”.

The S&D group also presses for maintaining and strengthening the coherence of the traditional common policies, such as the CAP, cohesion and fisheries, because they are “perfectly integrated at European level” and are “much more effective at this level than at member state level”. They can also “play a decisive role in the new development strategy”. So there is no question of renationalising them or increasing their co-financing, as mentioned in an unofficial Commission document revealed by the press in autumn 2009, which was a re-emergence of the 2003 Sapir report.

SYNERGY BETWEEN BUDGETS

S&D members also see the need for building “stronger synergy” between the EU budget and the national budgets, which should be “complementary”. Their document therefore suggests, on the one hand, a “common and more precise analysis” of the state of national public finances (as proposed by the Commission with its peer review, except that the S&D wants to involve the European and the national parliaments) and on the other, better coordination of all public investments at European, national and regional level in the framework of the 2020 economic strategy. The Commission should play a key role in this coordination.

The text also places emphasis on the need to abolish the principle of ‘fair return’ because “all the member states have benefited and will continue to benefit from the EU budget”. It stresses the “added value” of the EU budget and the fact that in the future, “any transfer of competence to EU level will have to be accompanied by a transfer of matching financial means” from the national budgets. The European Council has the annoying tendency of “approving new Community initiatives” while remaining “extremely reluctant” to allocate means for them (eg in the context of combating climate change, the EU’s contribution to ‘fast-start’ aid for the developing countries).

In this context, the question of own resources will be crucial. The S&D group’s views here are similar to the proposals by Alain Lamassoure (EPP, France). The Socialists seek a short-term overhaul of the existing system, based essentially on national contributions, and the abolition of all rebates and derogations. Subsequently, a new own-resources system should be created. It would be “fiscally neutral,” ie it would not create any new taxes for citizens and the loss for states could be offset by a reduction of their contributions to the EU budget.

TOWARDS EUROPEAN TAXES

Under the new system, a “substantial part” of the revenues generated by taxes collected nationally and decided at European level could be paid directly into the EU budget, for example, a uniform percentage of VAT collected at national level. The S&D also supports the idea of a tax on financial transactions and ‘green taxes’. The group calls on the Commission to present concrete proposals by July 2011.

The S&D adds that available financial means need to be increased and mentions the possibility of more frequent use of the European Investment Bank (whose capital is held by the 27 member states) or public-private partnerships. Färm states that he will defend these ideas in his capacity as the Socialist coordinator in the new special committee on preparation of the financial framework.

The document is available at www.europolitics.info > Search = 276885

“In the future, any transfer of competence to EU level will have to be accompanied by a transfer of matching financial means”