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Possible new EU taxes: how to repay the recovery stimulus

BRUSSELS (Reuters) - The European Commission is asking EU governments to assign new, dedicated taxes to the EU budget, so that it can pay back its proposed borrowing of 750 billion euros to finance the economic recovery after the coronavirus pandemic.

Members of the European Parliament are seen during a plenary session on a new proposal for the EU's joint 2021-27 budget and an accompanying Recovery Instrument to kickstart economic activity in the bloc ravaged by the coronavirus disease (COVID-19) outbreak, in Brussels, Belgium, May 27, 2020. REUTERS/Johanna Geron

The extra incentive for governments is that if such taxes were to be introduced by 2024, EU countries could start paying less in national contributions to the 2021-2027 budget.

The Commission also wants governments to permanently increase their annual guarantees for the EU budget to 1.46% of their gross national income from the 1.2% now.

Below are the possible new revenues that the EU could get.

TAX ON COMPANIES BENEFITING FROM THE EU SINGLE MARKET

Companies that draw huge benefits from the EU single market and will survive the crisis thanks to direct and indirect EU and national support could be taxed. Estimated revenue 10 billion euros annually.

DIGITAL TAX

The EU is working within the OECD for a global tax on tech giants that sell services over the internet. But its own idea is that a digital tax applied on companies with a turnover above 750 million euros could generate up to 1.3 billion euros per year for the EU budget.

PHASING OUT REBATES

Various EU countries have rebates on what they contribute to the EU budget and the Commission in 2018 called to end them by 2025. It still believes rebates should be phased out, but over a much longer, yet unspecified, period.

MONEY FROM ADDITIONS TO THE EMISSIONS TRADING SYSTEM

Governments would keep what they now get from the system of trading CO2 emissions permits, but any extra money would go to the EU budget -- like from trading emissions permits for air or maritime transport which are not yet included in the system. Estimated revenue: 10 billion euros.

CARBON BORDER ADJUSTMENT TAX

The EU wants to put a tax on goods imported into the EU from countries that do not have the EU’s ambitious goals for the reduction of CO2 emissions, to protect European companies which will have to abide by the higher standards. Estimated revenues from 5 billion to 14 billion euros a year.

PLASTICS TAX

EU countries could pay a tax on the amount of non-recycled plastic reported every year to the EU statistics agency Eurostat. Estimated revenue: 7 billion euros annually.

Reporting by Jan Strupczewski, Editing by William Maclean

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