EU Budget Proposal Falls Short on Favorable Terms
In the heart of Durban, South Africa, Finance Minister Lars Klingbeil of Germany voiced his opposition to the European Union's (EU) proposed budget on the sidelines of a G20 finance ministers meeting. The German government, under Chancellor Friedrich Merz, has taken a firm stance against the EU Commission's ambitious budget expansion, expressing concerns about the implications for national finances and debt.
The European Commission has proposed a new seven-year budget, the Multiannual Financial Framework (MFF), totalling nearly €2 trillion. This budget, roughly at the same level as the previous one, has sparked widespread dissatisfaction from various EU institutions and member states, including Germany.
At the core of the controversy is the Commission's new corporate tax mechanism, the Corporate Resource for Europe (CORE), which aims to generate around €6.8 billion annually via lump-sum payments from large multinational corporations. The levy on large companies, with an annual turnover of more than 100 million euros, is a point of contention for the German government. Klingbeil has criticised this proposal, expressing his view that it sends the wrong signal for the German government.
Another contentious issue is the proposed 15% of revenues from national tobacco taxes to be transferred to Brussels, a move that Germany also opposes. The German government's aim is to strengthen the country's economy, secure jobs, and attract investments, and these tax proposals are seen as counterproductive to these goals.
The EU Parliament has strongly criticised the proposal due to insufficient information and unsatisfactory presentation, with MEPs expressing frustration at being poorly briefed compared to the press. Some MEPs have threatened not to enter negotiations given the lack of transparency.
Critics accuse the proposal of lacking adequate funding for development aid and of risking diverting resources towards short-term political gains rather than addressing poverty and inequality. Provisions on cuts or shifts in funding, especially to the Common Agricultural Policy (CAP), have also sparked protests from farmers and accusations from governments like Hungary of attacking agricultural interests.
Germany, along with other fiscally conservative countries like the Netherlands, has expressed clear disapproval of the costly budget, fearing the financial burden on member states and opposing increased debt or contributions to the EU budget.
This pushback signals a potentially difficult negotiation ahead to reconcile different political and economic priorities within the EU. As the controversy unfolds, it remains to be seen how the EU will navigate these challenges and reach a consensus on the future of its budget.
The proposed EU budget, the Multiannual Financial Framework (MFF), has sparked opposition from Germany, particularly due to the new corporate tax mechanism, the Corporate Resource for Europe (CORE), and the proposed transfer of 15% of national tobacco taxes to Brussels. The German government, under Chancellor Friedrich Merz, is concerned that these tax proposals may be counterproductive to its aim of strengthening the country's business and finance sectors.
