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Berthold Busch / Björn Kauder IW-Report No. 3 19. January 2022 Does the EU need new own resources?

The European Union will incur a large amount of debt to finance the Next Generation EU Programme. The repayment of this debt is expected to last until 2058.

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Does the EU need new own resources?
Berthold Busch / Björn Kauder IW-Report No. 3 19. January 2022

Does the EU need new own resources?

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German Economic Institute (IW) German Economic Institute (IW)

The European Union will incur a large amount of debt to finance the Next Generation EU Programme. The repayment of this debt is expected to last until 2058.

In connection with the own resources decision for the years 2021 to 2027, it was agreed to introduce new categories of own resources to be used for the repayment of the funds raised on the capital market. These include own resources based on a carbon border adjustment mechanism and a digital levy, as well as own resources based on the EU Emissions Trading System, with an extension of the system to aviation and maritime also under consideration. Furthermore, the roadmap stated that the Commission will propose further own resources – if possible by June 2024 – after an impact assessment: A financial transaction tax as well as a "financial contribution linked to the corporate sector or a new common corporate tax base". Already introduced with the new own resources decision is a plastic levy as a new source of financing for the EU budget. Theoretical considerations show that revenue from some of the new own resources under discussion could well be allocated to the EU level. However, the creation of new own resources leads to distributional effects, as shown by the example of the plastics levy. Despite the theoretical suitability of some new own resources, it should be borne in mind that own resources based on gross national income – which currently finance more than 70 per cent of the EU budget – are overwhelmingly considered to be the most appropriate source of revenue for the EU budget. They can be seen as a comprehensive measure of the economic performance of the Member States.

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Does the EU need new own resources?
Berthold Busch / Björn Kauder IW-Report No. 3 19. January 2022

Does the EU need new own resources?

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German Economic Institute (IW) German Economic Institute (IW)

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