EU to Propose Europe-Wide Taxes

August 11, 2010 International Tax CooperationTaxation in EUTaxation in FranceTaxation in GermanyTaxation in UK

Euro coinsThe European Union will soon attempt to extend its revenue raising powers by imposing new taxes directly within all of its member states.

Janusz Lewandowski, Budget Commissioner of the European Union (EU), revealed on August 9th, that a new proposal will be released in September, outlining a series of new “eurotaxes”. Initially, the EU will suggest the implementation of a uniform tax on air travel, and selected inter-bank transactions. A pan-Europe Carbon Tax will eventually be mooted, if the first two levies prove to be successful. The rates and specific details of the new taxes will be revealed upon the official release of the proposal.

According to Janusz Lewandowski, the present structure of funds-sourcing for the EU “does not reflect the spirit of [EU] treaties.” The Commissioner added that in recent months he has corresponded with several Euro-area Governments, many of which indicating their wishes to lower their EU Budget contribution payments. If the decreases are to be carried out, the Union will need to find alternative revenue streams to fund its EUR140 billion annual budget. Currently over 75 percent of the EU’s revenues come from member-state Government’s contributions, with the remainder being supplied by import duties on goods brought into the European Union.

However, despite allowing the EU to lower its reliance on monetary support member states, Janusz Lewandowski’s proposal received almost immediate backlash from the UK, Germany and France. The Governments of all three nations claimed that Euro-wide taxes would strip independence from fiscal decision-making of European nations, and would be a further step towards a “federal Europe”. James Sassoon, Commercial Secretary to the Treasury of the UK, summarized the sentiments, saying: “The Government is opposed to direct taxes financing the EU budget. The UK believes that taxation is a matter for member states to determine at a national level and would have a veto over any plans for such taxes.” Although, not all political comments so far have been negative, with Jose Luis Zapatero, Prime Minister of Spain saying, “…all debate which aims to strengthen the EU’s economic and financial capacity is followed with interest by Spain.”

Photo by sandeep thukral

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