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Making the EU budget work for Europeans: a Fiscal Union
Over 70% of the EU budget’s revenues come from the member states based on their Gross National Income (GNI), i.e. all the money earned by each country’s residents and companies annually. This means that the EU funds are largely dependent on the changing economic situation and the political will of each member state. Every 7 years, the member states decide on the EU’s long-term budget, often prioritising their narrowly-defined interests over the common good of all Europeans, including the possibility to block the adoption of the budget entirely by a single national government.
The EU should become a Fiscal Union with an independent budget large enough to fund its own policies. This should be based on the Union’s capacity to collect taxes and issue debt. Such a solution will strengthen the resilience of the EU to economic crises and let it provide public goods to all Europeans, while respecting the principle of subsidiarity, i.e. ensuring the EU acts only in the areas where it has more added value than national or local governments. The introduction of new EU taxes should be based on a co-decision of the European Parliament and the Council, with no right to block it by a single member state.
The currently discussed EU taxes as part of the post-pandemic recovery plan on plastic, carbon, financial transactions, and activities of digital companies should be swiftly adopted, maintained as permanent instruments and complemented with new own resources in the future.