Friday, 23 November 2012

Leaked budget draft shows EU admin costs to rise 13%

A draft of the EU budget leaked today has revealed no change in a proposed significant rise in the EU's administration costs.

The latest draft, circulated by EU Council president Herman van Rompuy and revealed by
Open Europe, shows the Administration budget at €62.6bn - a 12.8% increase over the 55.5bn in the 2007-13 MFF - rather than falling with other public administration cuts in EU member countries.

The European Commission, supported by the European Parliament, 
originally proposed a 5.8% rise in the overall budget framework to 1.033tr.
This included a 6% share for Administration, taking the cost up to 62bn.

The EU's administration costs have become the focus of today's negotiations in Brussels, with the Prime Minister taking aim in particular at the pay and perks of EU officials. It would be particularly difficult for him politically to return without securing a significant cut in the EU's admin costs.

It is also not clear to what extent discussion over direct EU taxes are forming part of the EU budget negotiations.

Herman van Rompuy last week tried to turn the spotlight on Britain by proposing that proceeds from a new Financial Transactions Tax - in which Britain will not participate - should be contributed to Brussels and the amount offset against a country's contributions to the EU budget.

Last year, the European Commission
also proposed replacing the existing VAT-based contribution to the EU budget with a "modernized VAT" to arise "directly from the citizen to the EU".

The plan is thought to entail VAT levied at a fixed percentage by all member states in addition to national rates - likely to be a 1% uniform rate, rather than the 0.3% share of UK revenues the EU collects currently - and then transferred directly to the EU budget.

If no agreement on the EU budget is reached in time to allow for legal ratification of the new deal by the end of 2013 - under a political, rather than legal, Inter-Institutional Agreement - the 2013 budget will be rolled over year-by-year with a built-in 2% rise to cover inflation.

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