How the EU wants to raise the billions for its debt service – economy

It is about an enormous debt burden – and it has to be paid off: Overall 807 billion euros the EU Commission wants to distribute the Corona aid fund to member states. The fund is filled with the help of bonds; the Brussels authority borrows money from the financial markets. These loans are expected to be paid from the EU budget between 2028 and 2058. To make this easier, the commission should receive new sources of income – and this Wednesday, the head of the authorities Ursula von der Leyen will present proposals. Argh late, because that would actually have been due by June.

the Süddeutsche Zeitung a six-page draft of the concept is available. Accordingly, the authority wants to secure part of the proceeds that flow to the states through the expansion of emissions trading and the planned climate protection tariff. The commission also wants to benefit from the global redistribution of taxation rights on corporate profits: the result of the tax reform of the century that was negotiated under the umbrella of the industrialized countries organization OECD.

But what is also interesting is what is missing: The paper does not mention the long-discussed digital release with any syllable. This is a special tax for online companies like Google or Amazon. However, US President Joe Biden has made his approval of the OECD tax reform conditional on such taxes, which primarily burden American companies, being abolished and no new ones being introduced. That is why such a proposal from the Commission would be delicate. Three weeks ago said economic commissioner Paolo Gentiloni in the EU Parliament, the work on the digital delivery is only pausing. Now it looks like the idea is de facto dead.

The CSU MEP Markus Ferber would not be sad about it: “We cannot let the OECD agreement fail because of such a digital levy,” says the economic policy spokesman for the Christian Democratic EPP group. “With that the EU would have made a fool of itself on the international stage.”

Google should pay more taxes in Europe

In the draft concept, the crucial percentages and billions are preceded by X letters as placeholders. But at least it can be seen where and how the authority wants to get hold of. The OECD tax reform will result in large global companies paying more taxes in countries where they have many customers but no significant branches. As a result, for example, US Internet companies such as Google would transfer more taxes in Europe. The Commission wants to present a directive in July that will translate this global agreement into EU law. And the authority is now demanding that each member state pass on part of the additional tax revenue to Brussels.

The second new source of income should be CO2 border adjustment system proposed by the Commission in the summer. This is a kind of punitive tariff for imports from countries in which products are manufactured that are more harmful to the climate than in the EU. After all, Brussels’ ambitious climate protection targets are a heavy burden on domestic industry. This harbors the risk that production will simply be relocated from Europe to countries with more lax regulations. The goods would then no longer be manufactured in the EU, but imported. The climate would not be helped and jobs were being lost in Europe. The new system is supposed to make such dirty imports more expensive. And the Commission would like to receive a share of the revenue from the EU governments.

The tightening will hit Poland hard

Third source is the expansion and tightening of the Emissions trading system. Since 2005, power plants and many industrial companies have had to show tradable pollution rights when they release greenhouse gases into the atmosphere. The proceeds from the auctioning of these rights will go to the EU governments, but the Commission would like to take some of them in the future. The tightening of emissions trading would hit countries like Poland, which are heavily dependent on coal electricity, particularly hard. So that these states do not contribute disproportionately much to the Commission’s new source of income, the concept paper proposes a compensation mechanism.

These three springs are expected to gush out in early 2023. But this requires the approval of the EU governments – and that is not a sure-fire success. CSU man Ferber therefore warns that the member states must “now process the proposals seriously and quickly”.

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