EU Budget 2007-2013: Alternative Financing Sources

Margit Schratzenstaller () and Bernd Berghuber
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Bernd Berghuber: WIFO

Austrian Economic Quarterly, 2007, vol. 12, issue 1, pages 34-50

Abstract: Without any tax sovereignty of its own and faced with a substantial decline in the volume of its "traditional own resources", the EU is left with a very low degree of revenue autonomy. The EU budget is financed primarily from national contributions by the member states. There is a growing contradiction between the absence of an EU tax sovereignty, on the one hand, and the trend towards deeper European integration and the fact that a number of "European public goods" and activities with positive cross-border external effects are financed from EU funds. Key features of a reform of the EU financing system could be the abolition of the VAT-based revenue component, the continuation of a supplementary revenue source based on Gross National Income (GNI), and the attribution of dedicated taxes to the EU (notably a tax on foreign exchange transactions and a kerosene tax).

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