On 16 January 2017 the High Level Group on Own Resources (HLGOR) presented the final results of its work. The group – chaired by Mario Monti – was established in 2014 with the aim to study and propose measures to make the EU budget revenue simple, transparent and fair.

The report examines the current system of own resources in depth. The Commission defined such resources as "tax revenue, permanently allocated to the EU to finance its budget, due to it by right without the need for any further decision by the national authorities".

Own resources are currently made up of customs duties, sugar levies, the tax rate levied on the harmonized base of value added tax (VAT) and the rate levy on gross national income (GNI). They represent the main EU financial instrument.

In the report the group stressed the positive aspects of the current system, such as the principle of equilibrium of the EU budget, the centrality of traditional own resources such as customs duties and the rate calculated on the basis of GNI.

However, the group has highlighted some problematic aspects, too. First of all, there has been an increasingly strong resistance from the Member States (MS) to contribute to the EU budget, thus making it urgent for the EU to ensure the development of new means of financing. Secondly, there is not a widespread perception of the added value given by the EU action, value that is added to that which is generated by the action of the individual MS. Finally, there is no unambiguous definition of what EU's own resources are. Oftentimes these resources are perceived as an extra charge for MS, rather than as resources that belong to the EU. 

In response to this situation, the HLGOR elaborated some recommendations:

- A reform of the EU budget is necessary – both on revenue and expenditure side – to address EU priorities and to help solve the challenges citizens face today.

- The EU budget needs to focus on areas bringing the highest ‘European added value’. A reform of own resources would impact the composition of revenue, not the volume of the EU budget. It should not increase the overall fiscal burden for the EU taxpayer.
- A new mix of own resources should be considered, particularly those that would help to implement EU policies. Examples are taxes that relate to the Energy Union, environment, climate and transport policies.
- Revenue other than own resources need also to be explored - for example, auctioning proceeds or other revenue stemming from EU policies (border control, digital single market).
- All correction mechanisms should be abolished.
- The coherence of the EU budget and national budgets within the European Semester should be reviewed, in order to create synergies and minimize the tax burden.
- a certain degree of differentiation should be allowed, notably for the further development of the euro area or for policies under enhanced cooperation.

The conclusions and recommendations of the Panel are not binding for the European Commission. Nonetheless, they are still very important because, along with other contributions and documents, they will form the basis for the discussion and the political negotiations on the next Multi-annual Financial Framework.

Further information on the Group's work and the complete report are available here.
A summary of the report is available here.

 

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