EU Must Levy Its Own Direct Tax To Fund Budget, Says Austrian Leader

by Ulrika Lomas, Tax-News.com, Brussels

12 July 2005

Austrian Chancellor Wolfgang Schuessel has suggested that the European Union should be allowed to levy and collect its own direct tax from financial transactions as an alternative method of funding the EU budget.

In an interview published in Sunday's Bild Am Sonntag, Schuessel argued that the present system for funding the EU budget, half of which is drawn from the treasuries of member states, and the other half from levies on agricultural imports, customs duties and VAT revenues, is becoming increasingly unviable.

"We need a fundamental budget reform that provides the EU with its own source of cash," the Austrian leader stated.

"I suggest there should be an automatic financing mechanism for part of the EU budget - for example through taxation of international financial transactions," he added.

Noting that agreement between national governments on budget contributions is becoming harder to come by, Schuessel warned that budget talks in the future would become "ever more brutal".

His warning came after ministers failed to agree the EU's funding requirement for the period 2007 to 2013 last month.

Austria is due to assume the six-month rotating presidency of the EU at the end of 2005.

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