“Suggestions of a Plastic Tax and Other New Sources of Income for the EU Are Far from Convincing”

While it would be good to see greater transparency regarding the sources of income for the EU budget in the next Multiannual Financial Framework (MFF) from 2021 to 2027, this is not going to be achieved by any of the new own resources recently suggested by the European Commission. This is the finding of an analysis conducted by Professor Friedrich Heinemann, head of the Research Department “Corporate Taxation and Public Finance” at the Centre for European Economic Research (ZEW), Mannheim.

The analysis assesses and ranks the proposed new sources of income for the EU budget put forward by the European Commission. These proposals include a plastic tax, income from European trade of CO2 emissions permits and an EU tax on a future common consolidated corporate tax base. The analysis comes to the conclusion neither a tax on plastic waste, nor revenues from emissions trading or an EU-wide corporation tax are going to be salient for taxpayers. Hence, they will not improve transparency. Such measures are also unlikely to fulfil the hope that new taxes will reduce interest of the EU member states in the backflows from the EU budget. This is currently clear to see in the insistence of recipient countries that current European agricultural and cohesion policy remain unchanged, even though the funding side of the EU budget is in actual fact supposed to be changing.

As for why the European Commission is still pushing forward with these new suggested sources of income, Friedrich Heinemann has the following explanation: “Our analysis confirms the suspicion that these new sources of revenue are not primarily about greater transparency, but rather about eliminating resistance from Member States against the expansion of the EU budget. The suggestions of a plastic tax and other new sources of income for the EU are therefore far from convincing.”

For more information please contact

Prof. Dr. Friedrich Heinemann, Phone +49 (0)621/1235-149, E-mail friedrich.heinemann@zew.de