A Taxing Question for Europe

The European Union is currently in the process of accepting the 2007-2013 budget. It’s been a long road of disagreements, debates, criticism and compromises. In order to make future negotiations less painful, Austria’s Chancellor Wolfgang Schüssel has proposed a tax that would free up funds for Europe.

Daniel Gros, director of the Center for European Policy Studies, told DW-WORLD that the form such a tax would take is still unclear. Financial transactions have been mentioned as a possible source of taxation but Gros claimed that "this would not make sense."

What could work, is EU workers paying part of their income tax directly to Europe instead of through their national governments. Such a process would have several advantages. It would simplify some of the bloc’s complex processes while leaving businesses completely unaffected.

Tax likely to meet strong opposition

Member states which resist further integration would invariably oppose the tax. Great Britain has traditionally dismissed such policies. Recent comments by Prime Minister Tony Blair, however, hint at a change of opinion.

“We’ve never been in favor of Europe taxes," Blair remarked at the European Parliament in December. “But whatever method you come up with, you’ve got to raise the money. So the question is: what is the best way to raise the money?”

Daniel Gros made little of this statement. "Blair has made comments on increased integration before", he said, "but has failed to act upon them."

Opponents are also likely to describe this as an additional burden but the tax itself would not be new -- the process of collecting it would be the major change.

An official proposal on European tax is unlikely before 2009. At that point member states will begin voicing their concerns or support. For now, all eyes are on the European Parliament as it begins a new round of discussions aimed at passing the next EU budget.