EU Parliament backs bigger long-term budget, setting up clash with governments

The European Parliament voted on Tuesday to push ​for a larger 2028-2034 EU budget to boost defence and competitiveness while protecting farming ‌outlays and spending on poorer regions, setting up a showdown with member states reluctant to pay more, Report informs via Reuters.

The parliament, which co-decides with EU governments on the bloc's seven-year spending plans, voted 370-201 with 84 abstentions, to seek a budget of 1.38% of ​EU gross national income, rather than the 1.26% the Commission proposed last July.

The gap largely ​stems from parliament adding pandemic recovery-fund repayments on top of the Commission proposal, instead of ⁠folding them into the total as the Commission did.

"We believe we cannot do more with less. ​That is a myth," the rapporteur for the budget, centre-right politician Siegfried Muresan told parliament before the vote.

He ​said new priorities such as defence would be well funded while "traditional priorities... agriculture, fisheries, regional policy, continue to be funded."

In real terms, the Commission's proposal from last year translates to 1.76 trillion euros ($2.06 trillion) over seven years, of which 149 ​billion would be to repay the joint borrowing.

The Parliament's ​plan would lift the seven-year budget to 1.94 trillion euros, adding funding beyond debt servicing for cohesion--or spending to ‌reduce ⁠social and economic disparities--and agriculture, competitiveness, external policies and administration.

"We believe that paying back debt should not be at the expense of beneficiaries and programmes," Muresan said.

The EU budget is funded mainly by national government contributions, supplemented by customs duties and a share of member states' VAT revenues.

To fund the ​bigger budget, the Commission ​proposed five new sources of ⁠revenue, new "own resources" that would become EU money rather than national, and including revenue from carbon permits, and levies on tobacco, non-recycled e-waste and on ​large companies' turnover.

The European Parliament also proposed three other new revenue sources: ​a digital ⁠levy, a tax on transactions of crypto assets and on on-line gaming and gambling.

An EU-wide digital tax is likely to be strongly opposed by the United States, home to most big tech companies. Digital levies ⁠are ​already in place in Austria, France, Hungary, Italy, Latvia, Poland, ​Portugal and Spain.