The repayment of the debt contracted to finance the €421 billion in non-repayable grants from the Next Generation EU, together with the unprecedented increase in funds that the EU Commission deems should be allocated to defense, puts enormous pressure on the next multiannual budget of the Union for the period 2028-2034. It is necessary to raise money, but without displeasing the Member States by increasing national contributions. Thus, in the proposal laboriously made official on Wednesday, amid the discontent of the same majority that supports Ursula von der Leyen, the College of Commissioners has inserted five new"own resources" (revenue that directly feeds the community budget) that should complement existing ones, such as customs duties and a share of VAT. Translated: new taxes. For 44 billion a year, according to the slide projected by Budget Commissioner Piotr Serafin for the benefit of the Budget Committee of the European Parliament, which was not provided with any written document.
Serafin's announcements confirm, albeit without details, the contents of the drafts circulated in recent weeks: Brussels intends to hit tobacco, non-recycled electronic waste and businesses more, with a new" corporate resource for Europe. Furthermore, it proposes to add to the list a portion of the proceeds from the ETS system for the trading of emissions quotas and the new carbon tax at the border. Meanwhile, it hastily decided to backtrack on the idea of introducing a community tax on digital giants which would have displeased Donald Trump .
While we await the proposed tax rates, which are still blank in the drafts currently in circulation, we know so far that the greatest revenue is expected from a new resource tied to the quantity of non-recycled electrical and electronic equipment, which would also aim to reduce waste and improve collection systems: it is estimated at €15 billion per year on average. This is followed, with €11.2 billion in projected annual revenue, by the controversial new tax rate on tobacco, cigars, and e-cigarettes – coordinated with the revision of the Tobacco Excise Directive, which will update the minimum levels and expand the scope to new products. The tax would also hopefully save on healthcare costs and reduce tax fraud related to illegal tobacco production.
The Emissions Trading System (ETS) should instead guarantee €9.6 billion a year. The proposal to launch an ETS2, which would have targeted emissions from road transport and buildings, was scrapped, so revenue will only come from the existing ETS1, which concerns polluting companies. Another €1.4 billion is hoped to come from the Carbon Border Adjustment Mechanism (CBAM), a tax on carbon dioxide embodied or emitted for the production of goods imported into Europe. This tax was introduced to avoid distortions of competition in favor of groups based in countries with more permissive legislation. It should be noted that both requests had already been presented in 2020, together with the hypothesis of a financial transaction tax, but nothing came of them due to divisions among the Twenty-Seven.
According to the Commission, all European companies and multinationals headquartered in the EU with an annual turnover of at least €100 million, not €50 million as per previous drafts, should pay an additional €6.8 billion. The contribution would be a fixed annual amount, differentiated based on the company's turnover.
The total haul exceeds €58 billion annually if we also add the proceeds from the "adjustments" to existing own resources. The EU executive would like to increase the rate of the tax on non-recycled plastic packaging waste, introduced with the current Multiannual Financial Framework, and reduce the share of customs duties retained by Member States.
Moreover, just to repay the debt incurred to finance Next Generation EU, 24 billion euros a year will be needed: repayment will begin in 2028 and will last until 2058, and the overall cost estimated for the next seven years is 168 billion euros. And a full 131 billion euros, if the proposal passes, will go to defense and space: five times the current figure.
