EU Budget Is Unfavorable Agreement
The European Commission's proposal for a Corporate Resource for Europe (CORE) and a Tobacco Excise Duty Own Resource has sparked debate among EU member states and the European Parliament. The CORE, a lump sum annual financial contribution to the EU budget based on corporate turnover, is proposed for companies with an annual turnover of at least €100 million.
The Commission's proposal aims to generate around €6.8 billion annually to fund EU programs and repay COVID-related debts. The Tobacco Excise Duty Own Resource, on the other hand, would contribute 15% of the revenue generated from minimum excise duties on manufactured tobacco and related products.
However, the proposal faces opposition, particularly from Germany. German Finance Minister Lars Klingbeil has rejected the proposal, signaling resistance from one of the EU's largest economies. Klingbeil has expressed concern that the current corporate tax proposal is the wrong signal and that staying within financial limits is not guaranteed with the proposed budget.
The German government aims to strengthen the country's economy, secure jobs, and attract investments. Klingbeil also criticized the proposal for revenues from national tobacco taxes to be sent to Brussels, emphasizing that Germany cannot accept such a move.
The proposal requires unanimous agreement from all EU member states in the Council, consultation with the European Parliament, and national approvals. This unanimity is considered difficult to achieve, given diverse member state interests and past experiences with similar own resource proposals.
Critics argue that the lump sum approach is simplistic and may not address fundamental corporate tax avoidance issues. They urge the Commission to pursue comprehensive tax reforms targeting multinational tax avoidance and boosting effective corporate tax rates.
Negotiations on these proposals are expected to be lengthy, likely extending into 2026 or 2027, with the new own resources, including CORE, intended to apply from January 1, 2028, if approved. The tobacco tax and other new own resources are part of broader efforts to secure dedicated revenue streams for the EU budget but remain highly debated.
The European Commission's proposed Corporate Resource for Europe (CORE) has generated discussions within the German business sphere, as Finance Minister Lars Klingbeil has expressed reservations about the plan's potential impact on German finance. The Minister believes that the proposed tax regime might send a wrong signal, and there's no guarantee the budget would stay within financial limits.
The ongoing debate over the CORE also involves the redistribution of tobacco excise duties, a component of the Tobacco Excise Duty Own Resource. Despite Germany's concerns about sending revenues from national tobacco taxes to Brussels, this proposed resource would contribute to the EU budget and help fund various programs and repay COVID-related debts.
