EU Budget Proves Unfavorable for Member States
In a significant development, Germany's Finance Minister, Lars Klingbeil, has expressed opposition to a corporate tax plan proposed by the European Commission. The proposal, which aims to generate additional revenue for the EU budget, targets large EU companies and multinational corporations as part of the EU's next long-term budget framework for 2028-2034.
Klingbeil's criticisms were made on the sidelines of a meeting of G20 finance ministers in Durban, South Africa. He finds the proposal unacceptable due to concerns over sovereignty, legality, and approach, reflecting the broader debate among Member States on the EU's ability to impose such taxes directly.
The corporate tax contribution, intended to make these corporations contribute their fair share to the EU budget, targets corporate profits that are currently under-taxed. The proposal, officially published on July 16, 2025, aims to finance priorities such as the green and digital transition, defense, and repayments of recovery funds like NextGenerationEU.
However, the tax proposal faces political resistance and legal challenges. The main concerns from dissenting Member States include the legal basis of the tax, potential conflicts with existing tax treaties, and disagreement over the principle of an EU-wide corporate tax contribution that could override national tax sovereignty.
Klingbeil's criticisms extend to another aspect of the EU budget proposal – the flow of 15 percent of national tobacco tax revenues to Brussels. This proposal, part of the EU budget for 2028-2034, is deemed unacceptable by Klingbeil, who believes it could jeopardize Germany's efforts to strengthen its economy, secure jobs, and attract investments.
Experts and campaigners argue that the move recognizes that large multinationals currently do not pay their fair share and see the EU proposal as a starting step towards curbing corporate tax avoidance. However, critics like Klingbeil want more comprehensive tax reforms rather than lump-sum financial contributions from corporations without deeper systemic changes to the international tax system.
As the debate continues, the EU's corporate tax proposal and the flow of tobacco tax revenues to Brussels remain contentious issues, with implications for the EU's financial future and the sovereignty of its member states.
The Finance Minister of Germany, Lars Klingbeil, has expressed opposition to the EU's corporate tax proposal at a G20 finance ministers meeting in Durban, citing worries over sovereignty, legality, and approach. Additionally, he finds the proposal to flow 15 percent of national tobacco tax revenues to Brussels unacceptable, as it could jeopardize Germany's economy and job security.
