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Financing the EU: New Context, New Responses

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  • Clemens Fuest
  • Jean Pisani-Ferry

Abstract

This paper discusses the introduction of new own resources to finance the EU budget. Currently roughly two thirds of the budget is financed from GNI-based own resources, which are essentially contributions made by the member states out of national tax revenues. While GNI resources are transparent, fair and in line with the principle of subsidiarity, they are criticised for leading to political debates that emphasise the cost of EU spending rather than on the benefits, and for contributing to the framing of discussions on the EU budget in terms of net balances, rather than value added through common policies and the provision of European public goods. Clemens Fuest and Jean Pisani-Ferry propose that the EU should receive a new source of funding in the form of revenue from the European emissions trading system (ETS). They recommend that revenue from the ETS be used to finance the EU fund for economic recovery (Next Generation EU), which was adopted in July.

Suggested Citation

  • Clemens Fuest & Jean Pisani-Ferry, 2020. "Financing the EU: New Context, New Responses," EconPol Policy Reports 24, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpr:_24
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    File URL: https://www.ifo.de/DocDL/EconPol_Policy_Report_24_Financing_EU.pdf
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    References listed on IDEAS

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    1. Fuest, Clemens & Hugger, Felix & Neumeier, Florian, 2022. "Corporate profit shifting and the role of tax havens: Evidence from German country-by-country reporting data," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 454-477.
    2. Clemens Fuest & Jean Pisani-Ferry, 2019. "A Primer on Developing European Public Goods," EconPol Policy Reports 16, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Sebastian Beer & Ruud de Mooij & Li Liu, 2020. "International Corporate Tax Avoidance: A Review Of The Channels, Magnitudes, And Blind Spots," Journal of Economic Surveys, Wiley Blackwell, vol. 34(3), pages 660-688, July.
    4. Thomas Tørsløv & Ludvig Wier & Gabriel Zucman, 2023. "The Missing Profits of Nations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(3), pages 1499-1534.
    5. Susanne Droege & Carolyn Fischer, 2020. "Pricing Carbon at the Border: Key Questions for the EU," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 18(01), pages 30-34, April.
    6. Alexander Krenek & Mark Sommer & Margit Schratzenstaller-Altzinger, 2019. "Sustainability-oriented Future EU Funding. A European Border Carbon Adjustment," WIFO Working Papers 587, WIFO.
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    Cited by:

    1. Niko Korpar & Mario Larch & Roman Stöllinger, 2022. "Comparing Scenarios for a European Carbon Border Adjustment Mechanism: Trade, FDI and Welfare Effects with a Focus on the Austrian Economy," wiiw Research Reports 460, The Vienna Institute for International Economic Studies, wiiw.
    2. Carrai, Maria Adele, 2021. "Adaptive governance along Chinese-financed BRI railroad megaprojects in East Africa," World Development, Elsevier, vol. 141(C).
    3. Sijbren Cnossen, 2022. "The C-inefficiency of the EU-VAT and what can be done about it," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(1), pages 215-236, February.
    4. Schratzenstaller Margit, 2023. "Elements of a European Green Fiscal Policy," Intereconomics: Review of European Economic Policy, Sciendo, vol. 58(6), pages 300-304, December.
    5. Liu, Jielun & Ong, Ghim Ping & Pang, Vincent Junxiong, 2022. "Modelling effectiveness of COVID-19 pandemic control policies using an Area-based SEIR model with consideration of infection during interzonal travel," Transportation Research Part A: Policy and Practice, Elsevier, vol. 161(C), pages 25-47.

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