Financing the European Union (EU)

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Financing the European Union (EU)

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Abstract

The first twenty years of the Community financial system have been marked by several important developments: The movement toward unification: Since the unification the various fiscal budgets created from the ECSC Treaty in 1951 have gradually been merged. In 1975, there were only two fiscal instruments: the general budget and the ECSC operating budget.

The creation and evolution of a system of original funding
1. The creation of the system (1953-1975)
2. The financial crisis of the Union (1975-1987)
3. The 'Delors Package I and II' (1987-1999)
The characteristics of the current system of financing
1. Evaluation of resources
2. Expenditure control community
3. The budget decision-making
The problems and criticisms of EU funding
1. The impact of enlargement
2. Equality before the policy of community care and the principle of solidarity
3. The opacity of the system and lack of financial autonomy
4. The Sapir report
The future of the system of funding
1. Solidarity and focus on growth
2. The issue of European tax

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[...] Expenditure control community The expenditure control community is central to the financing system of the Union since the late 1980's. Expenditures are twofold: Administrative burdens. These expenses are very low and in 2004 they amounted to just of the budget. Thus of EU expenditure is an expenditure of intervention. They are divided mainly between agricultural policy and regional policy, which account for 80% of the budget. The remainder is then divided in order of importance between external policy, research, transport and energy, information society and education. [...]

[...] The financing system has become increasingly complex over time, so that even the interested citizen finds it difficult to understand how it works. In terms of opacity, it should be emphasized that the implementation of the clearing completely blurs an already complex concept. Financial autonomy is also more limited. Although the financing of the budget is ensured by rules that are binding on all Member States, there is virtually no direct link with the citizens or taxpayers. The financing of the budget relies instead on transfers from the national budgets. [...]

[...] In spite of the established practices, many questions remain unanswered, and the establishment of the 2007-2013 budget combined with the enlargement of May 2004 has reignited the debate on the need to reform the financing of the Union. The problems and criticisms of EU funding The impact of enlargement The current debate on increasing the EU budget stems in part from its enlargement to ten new members. This expansion has posed a significant cost to the European Union, since the 10 countries concerned, will be major beneficiaries of the two main EU policies: the agricultural policy and the regional policy; given their economic structure and their delayed development delayed. [...]

[...] It also determines whether the British rebate or generalized correction proposed by the Commission, introduced an accounting logic in the European project. There is a real consensus on the questioning of the British rebate. Furthermore, Member States, in their majority, do not seem convinced by the extension of the correction mechanism to all net contributors. The principle of solidarity also requires the EU to be generous vis-à-vis the new Member States. However it is unclear yet whether the negotiations will lead to acceptance by the old member states that stand to see their aid reduced. [...]

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