Struggle over eu finances: parliament against shortcuts

Struggle over eu finances: parliament against shortcuts

The president of the EU parliament, martin schulz, said on thursday that deputies were not prepared to accept the cut in EU spending demanded by national governments. Like him, the president of the EU commission, jose manuel barroso, argued for more of the EU’s own resources through revenues from value-added tax and a financial transaction tax.

A number of net contributors to the EU, including germany, have already called for the EU commission’s proposed spending to be cut by at least 100 billion euros between 2014 and 2020. Savings are needed not only in national budgets because of the financial crisis. The commission has proposed spending 1.1 billion euros.

Barroso defended this amount. Seven-year financial planning is an important means of creating incentives for more growth and thus more jobs. The EU budget must be "an investment budget" with the goal of more growth.

"The austerity screw is being tightened, but the european parliament will not accept less money for the european budget," said schulz. "Calling loudly for shortcuts in the eu budget may be popular, but i don’t think it’s responsible," he said. The EU budget is "the biggest growth-stimulating measure that exists in the EU". Parliament will "make full use" of its right of co-decision.

A decision on the financial plan is to be made at the end of the year. Danish prime minister helle thorning-schmidt, who as current president of the eu council plays a key role in the search for an agreement between the commission, parliament and the 27 eu governments, kept a low profile. "Member states’ public finances remain under pressure and budget savings will be a major challenge in the coming years," she said.

However, she agreed with barroso that the EU budget must be more demanding of growth than it has been so far. In response to calls from the commission and parliament for the EU to raise its own revenue through a financial transaction tax and a share of the value-added tax, she said only that the EU’s financing must be "transparent and fair. "Member states with the same level of prosperity must also pay roughly the same into the budget," said. "The rich naturally have to pay in more than the poor."

The financial transaction tax is strongly opposed by a number of governments. Regardless, the question of whether a portion of the revenue from such a tax should go directly to the EU budget is also hotly contested. Germany rejects this direct financing. Barroso said this tax could reduce member states’ current payments to the EU budget by about half.

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