Plastics tax, carbon-trading cash to cover EU’s Brexit gap, officials say

BRUSSELS, Feb 14 — Top European Union official Charles Michel proposed today filling the Brexit gap in the EU’s next long-term budget with revenue from a new tax on plastics and funds from trading carbon emissions.

Presenting a so-called negotiating box, which will form the basis of intense horse-trading between 27 EU national leaders at a summit on February 20, Michel proposed a budget for 2021-27 at 1.074 per cent of the EU’s gross national income, or €1.095 trillion (RM4.9 trillion).

The departure of Britain on January 31 leaves a gap of more than €10 billion a year in the EU’s funding, since the UK was a leading contributor to the budget after Germany.

But EU officials said revenue from the plastics tax and money from the augmented carbon trading scheme, which would incorporate the transport sector, could generate €14 billion to €15 billion a year — more than enough to fill the gap.

The overall number, however, is still too high for a group of the biggest net contributors led by Germany, the Netherlands, Austria Sweden and Denmark. They don’t want amount to be any higher than 1.0 per cent of GNI and criticised the 1.07 per cent figure when it was presented by the Finnish presidency of the EU last year.

“The new EU budget proposal is a step backwards,” a German diplomat said. “It will make an agreement even more difficult.”

But senior EU officials involved in the preparation of the summit said 1.074 per cent of GNI was the mid-point of positions of the 27 governments that Michel consulted over the last two weeks and offered the best starting point for a compromise.

The European Parliament, which co-decides on the budget, wants 1.3 per cent of GNI and the European Commission has proposed 1.1 per cent.

EU institutions argue that the bloc faces major new challenges, such as the fight against climate change and its ambitious goal of not emitting more carbon dioxide than it absorbs by 2050, and needs more funds to accomplish that.

Michel also proposed that EU funding be conditional on governments respecting the rule of law — a point many of the net contributors insisted on to keep pressure on countries like Poland and Hungary that stand accused of violating democratic checks and balances. — Reuters