EU leaders to discuss new sources of financing for EU budget in Oct

By Jan Strupczewski

BRUSSELS, June 19 (Reuters) - European Union leaders on Friday asked Ireland, which takes over the rotating EU presidency in July, to propose by October new sources of money for the EU budget for 2028 to 2034 to defuse tensions between its net contributors and beneficiaries.

The EU budget is how the 27-member bloc finances all of its policies - from supporting farmers and developing new technology to student exchange programmes and equalising standards of living across member states.

According to the initial European Commission proposal, the 2028-2034 budget should be €2 trillion ($2.3 trillion). The Cypriot EU presidency last week proposed a cut of 2%, which was not enough for some and too much for others.

BITTER FIGHT FOR UNANIMOUS DEAL

Richer EU countries pay more into the budget than they get out of it, while poorer ones receive more than they pay. Every seven years, the two groups fight bitterly to reach a unanimous deal needed for the budget to pass.

To help reduce national contributions of the net payers while keeping the spending ambitions of the net beneficiaries, EU leaders will seek new sources of revenue that would not come directly from national coffers, called new own EU resources.

"Leaders agreed to task our Irish friends to accelerate work on new own resources. We need those additional revenues to reach a deal in December," the chairman of the summit, Antonio Costa, told a news conference after the leaders' talks.

"We need a robust and stable system of new own resources," the head of the European Commission Ursula von der Leyen, also present, said.

"By our next meeting we should have a shared understanding of how we want to finance the next MFF," she said referring to the Multiannual Financial Framework - the EU budget.

Among the proposed new financing options, rejected by some countries and supported by others, is a share of the cash that EU governments get from selling CO2 emissions permits to companies and a share of the tax on goods imported into the EU that were made in countries where climate policies are weaker than in the EU.

Other options include a tax on non-collected e-waste, a share of the tobacco excise duty and an annual lump-sum contribution from large firms operating and selling in the EU.

Further proposals include a levy on extreme wealth, on digital services, online gambling and crypto asset capital gains. Ireland will now have to see which of these options, or a mix of them, has a chance to get unanimous support from all 27 EU countries by the next EU summit scheduled for October.

ELECTIONS PILE ON PRESSURE

Legally, EU governments need to agree on the budget by the end of 2027. 

But because of elections in France, Italy, Poland, Spain, Greece, Estonia, Finland and Slovakia next year, a deal should be struck by the end of this year, so as not to become hostage to election campaigning.

Adding to the difficulty of reaching a compromise by December is a tug of war between countries which want to use the EU budget more to support their agriculture sector and to raise the standards of living in their poorer regions, and those who see new challenges such as defence and economic and technological competitiveness against the U.S. and China as more important.

($1 = 0.8727 euros)

(Reporting by Jan Strupczewski; Editing by Lincoln Feast, Helen Popper and Louise Heavens)