No budget deal without new EU-wide taxes, Costa tells leaders

There can be no deal on the EU’s next long-term budget this year without agreement on new taxes, António Costa, the president of the European Council, has told the 27 national leaders.

Costa penned a formal invitation letter to leaders, who will come to Brussels next week on 18 and 19 June, to continue thrashing out work on the proposal for a seven-year EU budget worth almost €2 trillion.

“We should focus our discussion on the key elements to facilitate an agreement by the end of the year,” Costa wrote in the letter dated 10 June. “This includes making progress on new own resources, which will be decisive for matching our ambitions with the necessary means.”

Raising new taxes, known in EU jargon as ‘own resources’, is one of the most controversial elements of the Commission’s blueprint, which has already been attacked by defenders of traditional spending priorities, from regional development funds to farm subsidies.

The proposal says Brussels could raise €58 billion annually through changes to customs revenues and existing green taxes, a tobacco tax, a levy on e-waste and a corporate duty.

But progress has stalled, and EU leaders have asked the Commission to assess additional proposals made by the European Parliament.

The Commission expects the Parliament’s suggested digital tax, levied on online gambling and crypto assets, could raise around €13 billion per year.

France has said it refuses to agree to a budget without major new taxes, while countries like Sweden and Germany – known as the frugals – dislike them.

Costa is piling pressure on leaders, knowing full well that a series of national elections, from France to Spain and Poland, await the bloc next year. EU officials are concerned that the topic of EU budget contributions could become embroiled in national campaigning.

Ireland, however, has stopped short of explicitly promising to close the negotiations during its six-month presidency of the Council of the EU, which begins on 1 July.

“We will also seek to secure a solid basis for the future work of the Union through the negotiation of the EU’s next long-term budget,” Micháel Martin, the prime minister, said when he unveiled his programme on Wednesday.

Costa also told leaders that the summit will focus on how to respond to China’s economic pressure, the next steps in EU enlargement, migration, the Middle East and the fight against illegal drugs.

Volodymyr Zelenskyy, the Ukrainian president, will address the leaders during the summit.

Nicoletta Ionta contributed reporting.

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