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The European Union Budget

The European Union Budget. Overview and Income. What we will look at. Income sources Correction Mechanisms Alternative Income Sources. Income. VAT - Rates. VAT – How many rates. GNI. Why GNI and not GDP? Flaws of GDP Is it an ‘own resource’?. Income. What does it all cost?.

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The European Union Budget

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  1. The European Union Budget Overview and Income Quaker Council for European Affairs – A Quaker Voice in Europe

  2. What we will look at • Income sources • Correction Mechanisms • Alternative Income Sources Quaker Council for European Affairs – A Quaker Voice in Europe

  3. Income Quaker Council for European Affairs – A Quaker Voice in Europe

  4. VAT - Rates Quaker Council for European Affairs – A Quaker Voice in Europe

  5. VAT – How many rates Quaker Council for European Affairs – A Quaker Voice in Europe

  6. GNI • Why GNI and not GDP? • Flaws of GDP • Is it an ‘own resource’? Quaker Council for European Affairs – A Quaker Voice in Europe

  7. Income Quaker Council for European Affairs – A Quaker Voice in Europe

  8. What does it all cost? Quaker Council for European Affairs – A Quaker Voice in Europe

  9. Who pays and who gains? • Flows from each country to EU • Flows from EU to each country • Is it a relevant question? Quaker Council for European Affairs – A Quaker Voice in Europe

  10. What does it all cost? Quaker Council for European Affairs – A Quaker Voice in Europe

  11. Who pays and who gains • Net contributors 1997 to 2006 • Germany • Netherlands • United Kingdom • France • Italy • Sweden • Belgium • Austria • Denmark • Luxembourg • Finland Quaker Council for European Affairs – A Quaker Voice in Europe

  12. Who pays and who gains? • Net Recipients 1997 to 2006 • Ireland • Portugal • Greece • Spain Quaker Council for European Affairs – A Quaker Voice in Europe

  13. New Member States Quaker Council for European Affairs – A Quaker Voice in Europe

  14. What is fair? Quaker Council for European Affairs – A Quaker Voice in Europe

  15. Corrective Measures? • UK Rebate and how it is financed – two different issues Quaker Council for European Affairs – A Quaker Voice in Europe

  16. Corrective Measures Why a UK Rebate? • Small agricultural sector (comparatively) • High VAT base • High net contributor • Rebate = € 4.6 bn average per annum • UK contribution after rebate = € 2 bn pa • UK 3rd highest net contributor (total) • UK 10th highest net contributor (per capita) Quaker Council for European Affairs – A Quaker Voice in Europe

  17. How is it financed? Quaker Council for European Affairs – A Quaker Voice in Europe

  18. What has changed? • Rebate in place since 1982 • CAP now smaller part of budget • VAT now smaller part of income calculation • New Member States – different balance of economic power • UK economy very strong • Rebate predated German reunification Quaker Council for European Affairs – A Quaker Voice in Europe

  19. Alternative Sources of Income Principles • Based on EU values • Transparency • Based on EU priorities • Link to citizens – accountability Quaker Council for European Affairs – A Quaker Voice in Europe

  20. More of the same? • Keep current own resources • Increase the share of VAT that goes to the EU • Top up with a GNI based formula Quaker Council for European Affairs – A Quaker Voice in Europe

  21. Something new – an EU Tax? Principles of good taxation: • simple and transparent • buoyant • broad based • low marginal rate • It should deliver ‘horizontal equity’ • It should deliver ‘vertical equity’ Quaker Council for European Affairs – A Quaker Voice in Europe

  22. Something new – an EU Tax? Issues at EU level with national taxation: • Horizontal tax competition. • Vertical tax competition • Can distort investment decisions • Can distort decisions on location of employment • Can distort shopping decisions especially in border regions Quaker Council for European Affairs – A Quaker Voice in Europe

  23. Quaker Council for European Affairs – A Quaker Voice in Europe

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