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# eu-budget - Wednesday 22 February, 2012

From Business ETC EU Budget

# eu-budget - Saturday 19 November, 2011

From Business ETC EU Budget

# eu-budget - Tuesday 17 August, 2010

NINE EUROPEAN UNION member states have written to the European Commission asking it to change its accounting rules in a bid to try and artificially lower their official budget deficits.

The countries, mostly from Eastern Europe, have asked the bloc to consider changing its classifications so that the costs of reforming their various pension schemes do not count towards their budget deficits.

Lithuania, Latvia, Bulgaria, Sweden, Slovakia, Hungary, Romania, Poland and the Czech Republic say that reform of their pensions systems, while expensive, create long-term benefit while inflating their short-term budget shortfalls.

In a letter obtained by Reuters today, the countries backed a German proposal to introduce new penalties for countries which exceed the Union’s ‘glass ceiling’ of running a budget deficit of more than 3% of GDP.

But they wrote:

Maintaining the current approach to debt and deficit statistics would result in unequal treatment of Member States and thus effectively punish reforming countries.

The European Commission has described the proposal to change budgeting rules as a “relevant” one, but insiders believe it would be difficult to change the rules as they form part of the Stability and Growth Pact, amendments to which would require the assent of all 27 member states.

“There is likely to be some understanding for the position of the nine countries, but it is difficult to say how far it will go,” one source told Reuters. “To change the accounting rules everybody has to be on board, and some are not.”

Ireland is likely to face massive penalties from the EU one way or another, after its official statistical agency Eurostat ruled that Ireland’s costs of recapitalising Anglo Irish Bank would not be discounted from its budget deficit – meaning its deficit could be up to 24% of GDP, eight times the EU limit.

# eu-budget - Monday 9 August, 2010

THE EU’S BUDGET COMMISSIONER has said he thinks the attitude of member states might have softened on the idea of introducing a direct EU tax.

Janusz Lewandowski, of Poland, told the German edition of the Financial Times that he felt member states who were suffering with budget difficulties of their own would welcome the idea of unloading their payments to the EU’s central coffers, with Brussels introducing a new direct tax to make up for it.

“Many countries want to be unburdened. In this way, the door has been opened to think about revenues that are not claimed by finance ministers,” he said.

If the tax was to be introduced, the Irish government would save about €1.5bn a year, as it would no longer have to pay to fund the EU on its citizens’ behalves – but would see Irish taxpayers potentially hit with a greater tax burden, with the economically crippled government likely not to cut its own PAYE rates accordingly.

Lewandowski said he had heard from several EU capitals, including Berlin, that member states would welcome the chance to reduce their own individual contributions to the Union’s finances. The German finance ministry has said it is against such proposals, however.

In what could prove to be another double-whammy for Irish consumers, one of the other aspects of funding being examined by Lewandowski is a potential aviation tax – on top of the €10 tax already levied by the Irish government.

The EU Observer reports that negotiations on such a tax could begin in early 2012 under the Danish presidency, when the EU begins discussions on its next seven-year budget. The current budget runs from 2007-2013.

With national governments already feeling the pinch from their own various austerity measures, the chances of a centralised tax reducing budgetary constraints on individual governments could be a realistic prospect.

The next EU Budget would likely be signed off on under the Irish presidency in the first half of 2013.