The high-level group on own resources (HLGOR), also known as the 'Monti Group', was established to reflect on more transparent, simple, fair and democratically accountable ways to finance the EU. Last month, Parliament's budgets committee welcomed its final report and recommendations.
The group concluded that reform of the EU budget - both on the revenue and the expenditure side - is necessary to address the challenges that the EU faces today and on which EU citizens expect tangible results.
Under the present multiannual financial framework (MFF) conditions, the EU budget cannot fulfil its full potential and many of the benefits of EU action remain hidden. EU expenditure should focus more on areas of public common goods, such as securing our external borders, stabilising our neighbourhood or tackling climate change.
A reformed income side of the budget would contribute to this shift. We concluded that new sources of income to be considered. The EU budget is mostly financed from 'own resources', which are sources of public revenue that belong to the EU but are collected on its behalf by member states.
There are currently three types of own resources: traditional own resources, mainly customs duties; a share of the nationally-collected value added tax (VAT); and the gross national income (GNI)-based own resource, conceived as the residual and balancing resource, but which provides the lion's share of EU revenue today.
The HLGOR has proposed different options to partially replace the GNI-based contributions. They would be more visible, more accountable and create a link with EU policies, such as improving the functioning of the single market and fiscal coordination (for example, an own resource based on corporate income tax), or those that relate to the energy union, environment, climate or transport policies (for example, a CO2 levy).
Such own resources would not only finance the EU budget, but also contribute to EU policy objectives - a new dimension for the EU budget.
The group has also recommended exploring revenue other than own resources, for example, auctioning proceeds or other revenue stemming directly from EU policies.
The direct and indirect impact of the EU budget should also be better measured. The current indicators, mostly net balances, ignore the added value of EU policies and participation in the largest single market. Additional indicators should be developed to give a more accurate picture of the costs and benefits of the EU.
Working group meetings were hosted by the European Parliament, Council and Commission. The group also held an inter-institutional conference with national parliaments on the future financing of the EU.
Follow-up on the report is now in the hands of the Commission, which is preparing its proposals concerning the post-2020 period, and of course in Parliament, which will use it in its reflexion and work for the coming year.
Any modification of the own resources decision requires unanimity in the Council, after consultation of Parliament. It can only come into effect after ratification in all member states.