Brussels (AFP)

To get the economies out of the recession, Brussels is proposing to borrow on a large scale on the markets to finance its recovery plan of 750 billion euros. But faced with the reluctance of states to put their hands in their pockets, it will have to find new resources to reimburse.

It will be one of the battles at the heart of the summit negotiations on Friday 27.

- How does the EU finance its budget?

At present, the main source of income for the Union is the national contributions of the Member States. The amount may vary depending on the year: in 2018, they represented 77% of revenue, i.e. 65.9% of payments made according to the GNI (gross national income) of the member states and 11.1% from VAT revenue , according to Commission figures. Added to this are customs duties and a few other miscellaneous sources.

Own resources are capped by a text which sets the conditions for financing the EU budget.

- Why does the Commission want to change the ceiling on own resources?

This ceiling, which determines the maximum amount that can be requested from member states to finance EU spending, is crucial in assessing the borrowing capacity of the Commission.

The difference between the own resources ceiling and the payments ceiling (maximum amount of expenditure committed under the budget) is the "room for maneuver" which the Commission uses as "collateral" for borrowing.

"The increased room for maneuver will demonstrate to investors that the EU budget can fulfill its obligation to repay the debt in all circumstances," said the EU executive.

It is currently set at 1.4% of gross national income in the EU. However, the Commission wants to temporarily raise the ceiling on own resources to 2%.

- New resources to finance the loan?

"If you pool all the resources, you could finance the loan, there would be no need to increase national contributions," a source told the Commission.

Brussels hopes that this argument will weigh to convince the countries more reluctant to increase the budgetary and fiscal powers of the Union.

The European Parliament supports the idea of ​​increasing the share of revenue, regardless of national contributions. At present, it does not vote or few taxes and depends on the goodwill of the member states, which "withdraws from sovereignty and democratic power", regrets Greens MEP David Cormand.

- What are these new resources?

The Commission has issued several lines of thought and estimated the potential revenue.

- A widening of the revenues collected on the European carbon market (the quota trading system, known as SEQE or ETS according to its English acronym) to the maritime and air sectors: 10 billion per year.

- A "carbon adjustment mechanism at the borders" to charge for imported goods whose manufacturing process is very polluting: between 5 and 14 billion per year.

- A tax on the activities of large companies: 10 billion per year.

- A digital tax on companies whose overall annual turnover is greater than 750 million euros: up to 1.3 billion per year.

Brussels also mentions the path of a tax on financial transactions.

According to Social Democrat Pierre Larrouturou, this could bring in between 57 and 60 billion euros per year.

These new proposals are in addition to the recasting of VAT and a tax on non-recycled plastics already proposed by the Commission in its previous draft budget 2021-2027.

Because it plans to repay loans only from 2027, the Commission believes that this would allow time to negotiate these new sources of income.

© 2020 AFP