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Its establishment goes back to 2014, chaired by the long-term Italian EU Commissioner and former head of government Mario Monti: the so-called “High Level Group on Own Resources”. Its mission: to come up with ideas as to how financing the EU could become more transparent, simpler, fairer and more democratic.

 

After 18 meetings, several interim reports and countless conferences, the Monti Group has presented its final report. It contains a number of options as to how the financing of the EU can be put on a safe and above all stable and calm foundation. So far, the EU has financed itself based on a mixture of customs revenue and a share in the VAT revenue of the Member States. Added to this, as the main source for the EU budget (about two thirds) are revenues calculated on the basis of the respective economic power of the EU Member States. This type of financing the EU almost calls for disputes and discord between the Member States. Hence, it was one of the objectives of Monti and Co. to find alternative methods of financing, which makes the EU more independent of the direct payments by Member States.

 

The final report, which has been presented now, lists quite a number of such proposals; however, deliberately without any preferences to have enough scope for manoeuvre in future negotiations

 

Included is a reform of the existing VAT system; an EU corporation tax; a Financial Transaction Tax as well as further financial activity taxes. Also under consideration are a CO2 levy; proceeds from the European emissions trading system; an electricity tax; a fuel tax; and an indirect taxation of import goods, which are produced in third countries with high emissions.

 

The question remains, whether Commission and European Parliament (which generally welcomes the ideas of the Monti Group) will be able to prevail against the Member States. Only the announcement of the proposals prompted some weighty Member States, in particular the so-called “net payers” (e.g. Germany and The Netherlands), to show their hostility.

 

What is evident is that it is high time to start thinking seriously about the future financing of the EU. According to recent estimates, the exit of Great Britain from the EU alone will leave a gap (“Brexit Gap”) of about EUR 10 billion p.a. in the EU budget. The Ministers of Economy and Finance will debate the report of the Monti Group on 27 January.

 

Further information:

Report of the Monti Group

Homepage of the High Level Group on Own Resources