European Commission Again Mulling EU Tax

by Ulrika Lomas, for LawAndTax-News.com, Brussels

02 February 2004

The European Commission is planning to raise again the possibility of a direct Europe-wide tax to fund the European Union, according to reports in the UK media.

The Independent revealed that draft proposals due to go before the EC in just under a week call for the complex system of VAT revenues and duties which finance the EU's EUR100 billion budget to be modernised and replaced with a direct levy.

The three options put forward for replacing the current system are: allocating a larger percentage of VAT revenues, imposing an energy tax, or allocating a portion of corporate tax revenue.

The draft document also contains plans to replace the UK's annual EUR3 billion budget rebate with a new system which would allow all countries which pay more into the European Union than they receive to claim some back.

According to the Independent, the UK government is set to strongly resist both proposed changes, arguing that the imposition of a direct European tax on British citizens is likely to increase instances of "Europhobia" in the country.

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