Hungry for cash: where will the EU find the money?

Seeking New Revenue: The EU’s Quest for Budgetary Independence

Poinews.com – As the next phase of European governance unfolds, member states are ramping up efforts to determine how the Union’s financial framework for 2028 through 2034 will be funded. At the heart of this conversation lies a concept known as “own resources”—revenues that belong directly to the European Union rather than being pooled from national treasuries. While this isn’t a novel idea, past negotiations revealed significant hurdles. During the previous budget cycle, all 27 nations struggled to reach consensus, ultimately settling on each country contributing 1.13 percent of its gross national income to fill the gap.

However, with ambitious plans to boost spending on artificial intelligence and military capabilities alongside continued support for farming and fishing industries, the bloc recognizes the need for centralized funding. Instead of relying on 27 separate national budgets, the EU wants money collected and deployed in a unified way. Yet securing agreement on fresh taxation mechanisms remains difficult, and existing proposals don’t satisfy every nation equally. Leaders must strike compromises that either please everyone or at least leave all parties equally dissatisfied.

The Political Challenge of New Taxes

A fundamental obstacle emerges from public sentiment: citizens generally resist additional levies. According to EU diplomats who spoke with Euronews on the condition of anonymity, the core question becomes how to persuade populations to embrace these charges. Taxes imposed at the European level frequently carry the perception of being forced upon nations from above, transforming them into potent political tools. Such measures can dominate election cycles and potentially determine whether governments survive or fall.

Negotiating positions vary considerably across the continent. Sweden, for example, maintains strong opposition to any type of own resource, contending that wealthier members would bear an unfair share of the financial load. Meanwhile, technical complications loom large. Many proposed taxes demand alignment of the bloc’s legal framework and must be established rapidly to begin generating income by 2028.

Carbon Border Adjustments: A Familiar Mechanism

One prominent option involves the Carbon Border Adjustment Mechanism, designed to work alongside the existing Emissions Trading System. This approach applies a comparable carbon cost to imported goods that produce significant emissions, currently covering iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen. By doing so, it prevents companies from shifting pollution overseas and guarantees fair competition.

Support for this mechanism runs strong among several nations. Finland, Austria, Portugal, and Poland stand out as enthusiastic advocates, with France also backing the initiative. Nevertheless, critics note that CBAM doesn’t introduce a genuinely new tax; instead, it channels money from an existing system toward Brussels. Additionally, while relatively uncontroversial, the revenue stream it produces remains limited.

Tackling E-Commerce with a Handling Fee

Another proposal centers on introducing a Union handling fee targeting small parcels imported from outside the EU, particularly those arriving via Chinese platforms like Shein and Temu. The logic behind this measure addresses mounting expenses faced by customs agencies processing billions of minor shipments annually. Since July 1, the bloc has applied a temporary €3 flat charge on parcels valued below €150. This interim levy will remain until comprehensive tax reform takes shape, including the creation of an EU Tax Authority headquartered in Lille, France, which will function as a central Tax Data Hub to enhance administrative efficiency throughout the region.

Advocates argue this proposal supports broader efforts to rebalance economic ties with China, countering a growing trade imbalance fueled by inexpensive imports that sometimes fail to meet European safety requirements or counterfeit regulations. Critics, however, point to uncertainty regarding actual revenue projections and warn that the fee could discourage consumers from purchasing low-cost items. Platforms may also adapt by expanding warehouse facilities within the EU to bypass the charge.

Current data indicates approximately 5.9 billion low-value parcels arrived in the EU during 2025, though no official estimate exists for how much income the handling fee would ultimately yield.