European Commission calls for more cash from EU members

BRUSSELS (Reuters) – The European Commission called on Tuesday for EU countries to contribute more cash to the bloc’s shared coffers through a new dedicated revenue stream calculated on the profit base of companies operating in each.

The call comes as the executive reviews the European Union’s long-term budget, which totals around 1% of the bloc’s GDP of 16 trillion euros ($17.5 trillion) and pays for various joint European policies.

The budget review is necessary to factor into the 2021-27 shared budget the effects of the global COVID-19 pandemic, Russia’s invasion of Ukraine, an energy crisis, rampant inflation and sharp interest rate rises.

“It is not a tax on companies, nor does it increase companies’ compliance costs. It will be a national contribution paid by Member States based on the gross operating surplus for the sectors of financial and non-financial corporations,” the Commission said.

The sharply higher cost of credit, which rose as the European Central Bank’s rates jumped from negative to 3.5% over less than a year, means that costs of servicing the EU’s borrowing of 800 billion euros for the post-pandemic recovery scheme have almost doubled to 30 billion euros.

The Commission proposed that 0.5% of the notional EU company profit base, an indicator calculated by Eurostat on the basis of the national accounts statistics, should be sent by EU governments to the 27-nation bloc’s coffers.

The EU executive estimates that such a contribution from governments would provide revenues from next year of about 16 billion euros in 2018 prices, per year.

The Commission had already proposed three new sources of revenue for the EU in December 2021 to help repay the joint post-pandemic recovery plan.

This included a share of revenues that governments get from the Emissions Trading System (ETS), a levy on imports from countries with emissions standards lower than in the EU and from a tax on the world’s biggest corporations agreed by the OECD.

On Tuesday, the Commission proposed that EU governments transfer a bigger slice — 30% rather than 25% — of their revenues from the ETS to the EU than originally proposed.

This would generate an additional 7 billion euros a year for the EU starting from 2024, the Commission said.

A further 1.5 billion euros a year in additional revenue would be generated if governments agreed to a tweak in the levy on imported goods from countries with less stringent emissions standards, called the Carbon Border Adjustment Mechanism.

($1 = 0.9174 euros)

(Reporting by Jan Strupczewski; Editing by Alexander Smith)