An EU Tax On Member States Remains On Prodi's Agenda

by Ulrika Lomas, Tax-News.com, Brussels

12 February 2004

The President of the European Commission, Romano Prodi, has hinted that a direct tax collected at EU level will be an inevitability in the longer term, as the executive body seeks to meet its spending commitments over the coming decade.

Addressing reporters following the announcement of the institution’s budget proposals for the period 2007 to 2013, Prodi remarked that "sooner or later” every political institution needs to control its revenues as well as its expenditures.

Supporters of an EU wide levy argue that a single tax will dramatically simplify the process of raising the Commission’s budget from national VAT, customs and direct tax revenues. However, the proposal is likely to be met with hostility from some of the more euro-sceptic member states, which are unwilling to cede taxing rights to the EU.

Prodi was optimistic that a compromise could be struck, telling reporters that he intends “to be very realistic.”

“I've made proposals that I feel can lead to an agreement," he explained.

The Commission is to release a report on revenue raising issues to member states later in the year.

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