
"Next Generation EU": Parliament clears way for coronavirus recovery plan
Decision on own resources opens up further sources of revenue.
JP – 09/2020
At the extraordinary European Council of
17-21 July 2020, the EU leadership agreed on a comprehensive package totalling
€ 1,824.3 billion, including the multiannual financial framework (MFF) and
exceptional reconstruction measures under the "Next Generation EU"
instrument amounting to € 750 billion. With its legislative opinion on the decision on own resources on 16
September 2020, which was adopted by 455 votes in favour, 146 against and 88
abstentions, the European Parliament has now given the green light to the
Corona reconstruction plan.
The decision on own resources is the legal
basis for the sources of revenue of the EU budget. The decision to adjust own
resources became necessary for finding new sources of revenue for the EU budget
to at least cover the cost of the recovery plan. The new decision on own
resources also includes the Commission's authorisation to raise funds on the
capital markets. Going beyond the actual decision, Parliament's opinion calls
for a legally binding timetable for the introduction of these new own
resources, as well as sustainable financing of the recovery plan, which could
otherwise be at the expense of future generations.
Potential for additional own resources
In connection with the raising of
additional equity capital, the introduction of taxes for multinational
corporations was brought into play as an optional measure, especially if they
are largely responsible for environmental pollution. Valérie Hayer (RENEW, FR),
co-reporter, made the same comment: "We will make sure that IT giants, tax
evaders, major third country polluters and others who benefit from our internal
market pay their debts without contributing fairly to our prosperity and the
protection of our environment."
Uncharted territory under contract law
Irrespective of the permissibility of an EU
tax in principle, it is undisputed that current contract law does not yet
include fiscal competence. The Commission's credit authorisation is also a new
instrument. However, there are already EU bonds but their volume has so far
been very limited and their revenues are in turn used for loans and not for
non-repayable grants.
Further steps to implementation
Now that the Parliament has approved the
decision on own resources, the EU Council can adopt it promptly. In order to
allow the recovery plan to be implemented as soon as possible, the decision on own
resources, once adopted by the Council will be submitted to the Parliaments of
the 27 Member States for ratification in accordance with their national
constitutional law.
Effects on social security
"Next Generation EU" - assuming the ratification
of the decision on own resources by the Member States - can have a positive
impact on social security in the medium term. By making use of this financially
powerful instrument and by strengthening and stabilising the internal market
accordingly, macroeconomic effects can lead in particular to a support of the
revenue side for the social security funds. The increase in important EU
programmes to accelerate ecological and digital change could also relieve the expenditure
side in the long term through indirect effects, e.g. by reducing health
burdens.