European Parliament Mulls 'Text Tax'

by Ulrika Lomas, Tax-News.com, Brussels

30 May 2006

A European Parliamentary working group is considering a proposal by Alain Lamassoure, member of the centre-right European People’s Party, to introduce a tax on SMS text messages and emails as an alternative source of revenue for the European Union's budget.

Under Lamassoure's proposal, a tax of about 1.5 cents would be levied on text messages, and a 0.00001 cent levy on every e-mail sent.

According to Lamassoure, such taxes have the potential to raise huge sums in revenue but would hardly be noticed by phone and computer users.

“This is peanuts, but given the billions of transactions every day, this could still raise an immense income,” he stated.

Earlier in the month, the working group on the 'future financial resources of the Union' reached a "broad agreement" that there is a need for the existing own-resources system which funds the European Union's budget to be replaced by a scheme more understandable to the public, possibly a new tax.

Support for an EU tax to fund the bloc's budget has been growing since the eventual agreement between member states on the current seven-year budget last December exposed the system's obvious flaws; at present, the EU budget is funded through a combination of import duties, value added tax revenues and direct contributions from member states - the so-called "Gross National Income resource" which is calculated according to wealth.

Parliamentarians have been suggesting a variety of sources from which the EU budget could be funded, including corporate profits and flight levies.

A comprehensive review of the EU budget funding mechanism is scheduled to take place in 2008/2009. European Commission President Barroso, who has hinted at his support for an EU tax, has indicated that no options should be left off of the table when the review takes place, and that the process should be examined "without taboos".

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