Hahn vs BUDG on the EU’s Own Resources

Commission and Parliament ‘fully aligned’ on need for new Own Resources, despite delay, says EU Budget chief
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By Andreas Rogal

Andreas Rogal is a senior journalist at the Parliament Magazine

01 Sep 2021

When the European Parliament’s official agenda announced the debate between its Budgets Committee (BUDG) and Budget Commissioner Johannes Hahn under the headline “Delay of new Own Budget Resources proposals”, the scene was set for a potentially acrimonious clash.

In his opening remarks on Tuesday, BUDG chair Johan Van Overtveldt put it bluntly. “Before the summer, the regular dialogue with the Portuguese Presidency was postponed, and then cancelled. Parliament was disappointed when the European Commission failed to present legislative proposals for new own resources in the first half of the year.”

The levy on digital companies, one of the three proposed new sources of ‘Own Resources’ revenue has, said Van Overtveldt a former Belgian former Finance Minister, been put “on ice because of the OECD negotiations and under some not too subtle pressure from the United States”.

And, as for more details about how the two other proposed sources - connected to the Commission’s “Fit for 55” climate policy package - a new Carbon Border Adjustment Mechanism (CBAM), and a reviewed Emissions Trading System (ETS) are supposed to work, MEPs had also waited for them “in vain”, Van Overtveldt lamented.

The senior ECR group deputy did not touch on the legality of the Commission’s delay in adhering to the June deadline prescribed in the Inter-institutional Agreement on a roadmap for the EU’s future own resources reached in December 2020, but many of his colleagues did.

Both co-rapporteurs on the dossier, Portuguese EPP Group member José Manuel Fernandes and French Renew Group member Valérie Hayer, chided Hahn over the delay with Fernandes querying, “I’m not sure whether Commissioner Hahn and the rest of his colleagues have understood the Inter-institutional Agreement. They are legally obliged to follow the roadmap”.

“Before the summer, the regular dialogue with the Portuguese Presidency was postponed, and then cancelled. Parliament was disappointed when the European Commission failed to present legislative proposals for new own resources in the first half of the year” European Parliament Budgets Committee (BUDG) chair, Johan Van Overtveldt

Hayer meanwhile admonished the Austrian Commissioner and the EU Executive saying, “We are used to some Member States not being quite loyal to legal agreements but from the Commission this is unacceptable”.

But Hahn had already made it quite clear in his opening remarks that he was not prepared to take a fighting stance on legal issues. He had argued against the postponement himself in the College of Commissioners, he admitted, but had not found a majority for his position.

However, the reasons for the postponement were not motivated by a desire to insult Parliament, Hahn explained. “A recent important development made us postpone our plans. On 10 July the G20 endorsed an historic agreement to create a more stable and fairer international tax system which addresses the challenges arising from the digitalisation of the economy.”

It had been reasonably argued, Hahn said, that a complete proposal on new Own Resources should take into account the result of the ensuing negotiations about this tax system within the framework of the OECD and the G20, which are scheduled to lead to an agreement, “including an implementation plan” at the G20 meeting in October.

Responding to those MEPs expressing fears about the EU process being held hostage by negotiations outside the Union’s realm, Hahn promised that the Commission, “will propose a complete package in October in any case, whether the G20 produces a deal” - of which he confessed to be quite confident - “or not.”

Hahn also highlighted his belief in the importance of presenting a complete Own Resources package, and not one in instalments, saying, “it should be in the interest of all three institutions, including the Parliament, that the Commission presents a balanced basket of new Own Resources that will not only broaden and diversify the sources of revenues […] but also facilitates negotiations and enables adoption”, which in this case, of course, requires unanimity in the Council.

“it should be in the interest of all three institutions, including the Parliament, that the Commission presents a balanced basket of new Own Resources that will not only broaden and diversify the sources of revenues […] but also facilitates negotiations and enables adoption”, which in this case, of course, requires unanimity in the Council" European Commissioner for Budget and Administration, Johannes Hahn

The ensuing debate illustrated this argument when many MEPs enquired about one aspect of the two “green” elements of the new Own Resources: the financing of the proposed Social Climate Fund which is meant to mitigate the impact of the energy transition towards Zero Emissions in 2050.

Would there be enough money for it, given that the Own Resources’ main task was to service the debt created by the NextGenerationEU post-pandemic investment and recovery programme?

Elisabetta Gualmini, the S&D Group’s negotiator on Own Resources, said in a statement that there were concerns the postponement could be used by some national governments, “as a negative precedent in order to act against the establishment of a new basket of Own Resources. In this sense, it is essential for the Commission to have a ‘plan B’ for the worst-case scenario, we cannot wait endlessly. Actions are needed now to repay the costs and interests of the NextGenerationEU.”

Hahn however, reassured MEPs that according to the Commission’s calculations there would be, but added that Member States would be expected to match EU funding with some of their revenues created by the ETS.

“Commission and Parliament are fully aligned” on the need for new Own Resources and how to use them, and had been for a long time, Hahn emphasised several times in response to MEPs. The real difficulties ahead lay in the third institution.

Many MEPs appear yet to be convinced of this.

Read the most recent articles written by Andreas Rogal - Slovenian MEPs row over Rule of Law report

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