Germany Refuses EU Tax

January 19, 2010 Taxation in EUTaxation in Germany

DSC_2462The Finance Ministry of Germany has stated that it is opposed to the imposition of an EU-wide tax, in response to a suggestion by the Finance Ministry of Luxembourg.

Ahead of the EU and Euro-zone Finance Minister Summit held on January 18th and 19th, Luc Frieden, Finance Minister of Luxembourg, called for a new tax to be instated across the whole of the EU. German officials quickly denounced the idea, claiming that the EU already has sufficient funds. The German Ministry also claimed that any created taxes would also serve to further complicate the standing fiscal contribution system.

The current EU fiscal contribution system is based on revenues gathered from customs and import duties, along with a levy on the Gross National Income of each member state. Justifying the need for change Luc Frieden said that while the citizens of any EU member state hold direct ties to their nation’s budget, there is no such connection to the budget of the European Union, and that the funding system should be recreated anew to form such links. He claims that an EU-wide environmental or Carbon Tax would be ideal, though a levy on financial transactions was also suggested.

The EU budget for 2010 is currently set at €122.9 billion. Traditionally nearly 30 percent of this figure is sourced from import tariffs and customs duties, with the rest comprised of levies on nation’s Gross National Income.

Photo by Boyan Yurukov