EU step closer to new revenues from emissions trading, carbon and corporate profits

The European Parliament clinched an important vote on the EU’s overall financing by approving a new generation of so-called ‘own resources’ revenues.

With 399 votes in favour, and 138 against, 61 abstentions, MEPs will ask the Council of Ministers to amend the bloc’s financing rules and start accepting income from emissions trading (ETS), a proposed EU carbon border adjustment mechanism (CBAM), and tax on corporate profits.

With its position, the European Parliament has also moved to fulfil another of the pledged conclusions of the Conference of the Future of Europe on fiscal and tax policies.

“We need new own resources to respond effectively to future crises and uphold the EU’s commitments to European citizens, all without burdening future generations with debt,” said Portuguese co-rapporteur José Manuel Fernandes (EPP). “Without these, EU programmes are slated to face cuts exceeding €15 billion annually. To avoid that, we are left with two options: either increasing member states’ contributions to the EU budget, thereby burdening citizens, or approving new own resources. The latter is the preferred path forward, and the Council must address this with the utmost urgency.”

It is the Council of the EU that will now have to endorse the proposals unanimously, with individual member states also having to ratify the new Own Resources decision.

The proceeds from these new “Own Resources” are essential to repay the debt the EU’s recovery plan, especially with rising interest rates having a heavy impact on the EU budget.

Against the background of high inflation, temporary reductions in the form of lump sums for Denmark, Germany, the Netherlands, Austria and Sweden, from which they benefit for the period 2020-2027, have also increased unexpectedly and disproportionately. MEPs said that these lump sums must be adjusted annually on a fixed deflator of 2% per year.

In 2020, along with the current long-term EU budget (multi-annual financial framework 2021-2027), the EU institutions agreed on a legally binding roadmap introducing new sources of EU revenue. On that basis, the plastics own resource, introduced in 2021, was the first new source of EU revenue since 1988. At the end of 2021, the Commission proposed three further own resources, updated in June 2023, but which EU countries have not yet adopted. MEPs urged member states to adopt the new EU income streams before EU elections in 2024.