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European Commission Presents Draft 2013 Budget

by Ulrika Lomas, Tax-News.com, Brussels

29 November 2012


The European Commission has presented a new draft European Union (EU) Budget for 2013 after conciliation talks ended without an agreement.

The Commission first presented its proposed draft Budget in April. After the European Council of member states reduced the draft, the original document was updated in October. However, the European Parliament subsequently reinstated most of the Commission's draft, and a 21 day conciliation procedure between the Council and the Parliament was initiated. The Commission acted as facilitator, but the negotiations ended without an agreement. Under the Lisbon Treaty, the Commission must in such cases present a new proposal.

The new proposal takes into account elements to facilitate convergence between the Parliament and the Council, as well as the need to honor past commitments. The level of commitment appropriations is set at EUR151bn (USD195bn), as opposed to the EUR150.9bn earmarked in the original draft. The total payment appropriations proposed have fallen marginally to EUR137.8bn, from EUR137.9bn in the original plans.

The EU Budget is funded chiefly from the EU's own resources, which are not allowed to exceed 1.23% of the EU's gross national income (GNI). There are three kinds of "own resources." "Traditional own resources" relate mainly to customs duties on imports from outside the EU and sugar levies. In addition, a standard percentage is levied on the harmonized value-added tax (VAT) base of each country, with the result that the VAT resource amounts to around EUR14bn. The VAT base is capped at 50% of GNI for each country, in order to prevent less prosperous countries having to pay a disproportionate amount. Finally, a standard percentage is levied on the GNI of each member state. It is used to balance revenue and expenditure, namely to fund the part of the budget not covered by other sources of income.

EU Commissioner for Financial Programming and Budget Janusz Lewandowski said of the new draft: "The bulk of the EU budget consists of payments or reimbursements to hundreds of thousands of beneficiaries across Europe such as towns and regions, students, medical researchers, NGOs and businesses. At the beginning of the current financial period, national governments selected projects to be co-funded by the EU; now those projects are reaching completion and the EU will have to pay those bills. Our new proposal should help the Council (Member States) and the European Parliament agree on a budget by the end of the year."

TAGS: tax | European Commission | value added tax (VAT) | budget | European Union (EU) | Europe

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