Select Committee on European Communities Sixth Report


FUTURE FINANCING OF THE EU: WHO PAYS AND HOW?

Financing agenda 2000

33.  The object of the Commission report which triggered this enquiry was "to review the performance of the EU own resources, including the search for new own resources as well as the possibility of applying a fixed rate of call for the VAT resource; and to examine the correction mechanism in favour of the United Kingdom and the issue of contributions to EU budget raised by several Member States"[25].

34.  Its conclusions may be summarised as follows:

  • although the equity of gross contributions among Member States has improved (primarily as a result of the increasing importance of the GNP resource), the system "has not secured genuine financial autonomy for the EU, and various interventions in the contributions system, including the correction mechanism in favour of the United Kingdom, have inhibited transparency in the financial relationships of the Member States and the EU budget"[26];
  • the system could be reformed by developing new own resources[27] or by simplifying the present contribution arrangements, relying increasingly or even exclusively on the GNP-based resource, possibly with an element of progressivity;
  • the issue of budgetary imbalances (inequitable net contributions) "has re-emerged in the budget debate"[28]; the report reviews the functioning of the existing correction mechanism in favour of the United Kingdom, and the emerging budgetary imbalances of other Member States, and considers how they are likely to be affected by the Agenda 2000 proposals.

35.  Three courses of action are considered which could, the Commission says, address the imbalances if there were a political consensus:

  • the reduction or phasing out of the present correction mechanism (that is, the United Kingdom abatement);
  • corrections on the expenditure side of the budget, in particular co-financing of CAP expenditure;
  • a generalised correction mechanism (that is, a general reassessment of contributions), for which various options are suggested.

36.  In the course of our enquiry, we have considered all these issues. Our witnesses' views on them, and our Opinions, are set out in Part 4.


25   11666/98 COM(98) 560: op cit, page i. Back

26   loc cit. Back

27   For details of the options considered by the Commission, see paragraph 80 below. Back

28   11666/98, loc cit. Back


 
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