More European taxes? The EU seeks to resolve the great division for the next budgets
The northern states want to cut accounts, while the southern ones push to expand them
BrusselsAgreement in disagreement. European leaders only agree on one thing about the proposal they have on the table for the next European multiannual budgets (2028-2034): they don't please anyone.
The starting point is always the same. When the European Commission and the Council of the EU (the body representing the member states) present a draft general accounts, European governments react in a similar way. Initially, complaints and maximum demands, and then they move closer until they reach an understanding. However, agreement is still months away and, as was noted at the European Council this Thursday and Friday in Brussels, they are only in the first stage of negotiations. Diplomatic sources expect a budget pact to be closed before the end of the year.
The groups of countries that form within the European bloc are also repeated every time new budgets have to be negotiated. The northern European member states, the so-called frugals, together with Germany, always advocate for the most austere budgets possible. They tend to reject any measure that involves a higher contribution from member states to the EU's coffers and that involves the creation of more common debt.
"We have to discuss the magnitude of these budgets. The figures must come down and we have to talk about the EU's income, because we can only spend the money we actually have," remarked the German Chancellor, Friedrich Merz, in statements to the media about the European budget proposal presented by the European Commission and the Council of the European Union, which increases military and competitiveness spending above all while reducing agricultural and regional cohesion policy.
On the other side are France, Italy, and, among others, Spain. The budget battle unites leaders as opposed as, for example, the Spanish Prime Minister, Pedro Sánchez, and the Italian Prime Minister, Giorgia Meloni, who have met for the first time since 2023 to form a united front against cuts in agricultural and cohesion funds. However, this has not prevented the socialist leader and the far-right leader from having a tense discussion on migration behind closed doors, according to diplomatic sources.
Thus, Sánchez has expressed himself in exactly the opposite sense to Merz. "We need much more ambitious budgets than we currently have. We cannot do more with fewer economic resources. This has been Spain's approach from the beginning," the Spanish Prime Minister assured at a press conference.
Beyond the increase or decrease in contributions that member states make to the EU budget, there is also a division between the north and south of the continent on which items to prioritize. France, Italy, and Spain, for example, advocate for maintaining investments in cohesion and the common agricultural policy (CAP), as they are among the countries that benefit most from them. In contrast, states like Germany or the Netherlands want to give more importance to boosting the defense industry, innovation, and the competitiveness of European industry.
More European taxes
One of the options that European leaders have put on the table to resolve these disagreements is the creation of new taxes at the European Union level. The President of the European Council, António Costa, assured at a press conference that the intention is to move forward with the increase of "new revenues" directly into the community coffers, something that also has the support of the European Commission. "We need a solid and stable system of new own resources," added Ursula von der Leyen.
Brussels proposes applying a new tax to large companies operating throughout the European Union, on tobacco, on electronic waste that is not recycled, and on polluting emissions. However, diplomatic sources point out that this Friday European leaders have shown themselves more in favour of promoting the levies put on the table by the European Parliament, such as a tax on large technology companies, on online betting, or on cryptocurrency transactions.
However, diplomatic sources admit that this is a path with significant complications. All measures relating to taxation must be approved by taxation and, therefore, it is difficult to reach an agreement, especially in an accelerated manner. Furthermore, these are levies that would have to be agreed upon almost immediately, as they should already enter into force from 2028, the first year of the new multiannual European budgets.