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EU lawmakers urge Commission to tax big biz in face of soaring debt

EU lawmakers urge Commission to tax big biz in face of soaring debt

by host

BRUSSELS — European parliamentarians are calling on the Commission to introduce EU-wide taxes in order to cover soaring interest rates on the bloc’s joint debt.

In a 356-199 vote, EU lawmakers on Wednesday backed a report urging the EU’s executive to raise levies on big businesses to finance its budget for 2024, which is under strain from record inflation and soaring interest on its common debt.

Euroskeptic parties that oppose centralized EU tax-and-spend policies voted against such plans and called on the Commission to find additional funds from its annual budget, which ranges from €160 to €180 billion

But supporters point out that extra cash is not only essential to prop up the Recovery and Resilience Facility (or RRF — the first-ever instance of EU joint debt), but also to sustain responses to rising challenges, from climate change to the war in Ukraine.

“We can’t stick to the EU budget being 1 percent [of the EU’s GDP], it’s a dogma and a limit we can’t work with,” French MEP Valérie Hayer, who co-authored Parliament’s report, told POLITICO.

“We have Ukraine, strategic autonomy, climate financing and digital transition — so we need to invest more,” said Hayer, who hails from the liberal Renew Europe group.

Interest rates have soared since the EU in 2020 agreed to issue joint debt to finance a €724 billion pot of cash that disburses grants and loans to member countries in exchange for investment and reforms.

Among other things, the Parliament’s text endorses introduction of new taxes on crypto assets, financial transactions and on foreign firms which pay workers less than the living wage, to generate extra revenue for the Commission.

The alternative would be to cut EU projects or ask individual countries to set aside money from their national budgets, say the plan’s supporters.

“The cost of debt in the EU budget will be over €15 billion per year — that’s about 10 percent of the budget,” said José Manuel Fernandes, co-author of the report and an MEP from the center-right European People’s Party (EPP). 

“These revenues will not penalize European citizens,” he added, referring to the proposed new taxes.

The suggestion to increase the Commission’s own resources was welcomed by pro-European parties, which traditionally support the EU budget becoming less reliant on contributions from member countries. 

The three biggest groups in Parliament — the EPP, the center-left Socialists and Democrats, and Renew — all voted in favor. The right-wing European Conservative and Reformists, and Identity and Democracy groups opposed the report, instead calling on the Commission to cut expenditure and echoing remarks from EU national leaders who supported a slimmer EU budget in the past.

The EU executive is expected to set out its budget proposal for 2024 this summer, with calls for extra spending likely to be met by resistance from more frugal EU countries.

“There is a big gap between Parliament’s position and philosophy in the Council,” Spanish MEP Eider Gardiazabal Rubial told reporters in Strasbourg.

“There are some countries that are not fans of own resources, but they will have to pay for ‘next generation EU,’” the S&D lawmaker added.

Eddy Wax contributed reporting.

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