Skip to content

Information for students, faculty and staff regarding COVID-19. (Updated: 31 March 2021)

Published: 31 Oct, 2016

FairTax research on sustainability-oriented EU tax-based own resources for the EU budget presented at Vienna conference

NEWS Can tax-based own resources represent a sustainability-oriented option for financing the EU budget in the future? And if yes, which taxes would offer themselves as own resources for the EU budget? These were the central questions discussed at the FairTax conference “Options for an EU Tax as an EU Own Resource”, at the Austrian Institute of Economic Research WIFO, Vienna, September 19, 2016.

WIFO, Vienna.

Follow this link to download papers and presentations from the conference
The research conference was organised by WIFO, Mendel University in Brno and King’s College London. Many researchers from a number of EU countries presented their ideas on reform needs and options for the EU system of own resources and their work on alternative funding options for the EU budget.

FairTax researchers from WIFO and Mendel University presented FairTax work on sustainability-oriented tax-based EU own resources and entered into an intense exchange of views with many researchers and stakeholder representatives attending the conference.
“In our research, we are studying different options that could be possible candidates for sustainability-oriented tax-based own resources in the future. The options that we presented at the conference in Vienna were: a carbon-based flight ticket tax, a carbon tax, a nuclear power tax, a common (consolidated) corporate tax base (C(C)CTB), a financial transactions tax and a net wealth tax.” says Margit Schratzenstaller, WIFO, leader of FairTax research on sustainability-oriented reform options for the EU system of own resources.

New system of own resources would support sustainability goals

The most important reason to fundamentally reform the EU system of own resources is that it does not contribute to central EU objectives.
“The current EU system of own resources does not support smart, sustainable, and inclusive growth as the central objective of the Europe 2020 strategy, nor does it contribute to the EU sustainable development agenda or its climate targets. In addition, most EU Member States’ tax regimes display sustainability gaps such as a high and increasing weight of labour taxes, a decreasing importance of Pigovian taxes, intense tax competition including profit shifting, issues of tax fraud and compliance, and a decreasing overall progressivity. A more sustainability-oriented tax-based system of EU own resources could reduce these sustainability gaps in EU Member States’ tax regimes.” Margit Schratzenstaller argues. 

FairTax researchers have identified and looked more closely at four sustainability-oriented candidates for tax-based EU own resources. Danuše Nerudová from Mendel University, leader of FairTax research on a common (consolidated) corporate tax base adds that C(C)CTB as a candidate for sustainability-oriented tax-based own resources has the potential to contribute directly and indirectly to reducing most sustainability gaps in EU tax regimes.
"For example, the introduction of a CC(C)TB can contribute to fair tax competition, to the elimination of profit shifting, to the decrease of tax fraud, to better tax compliance, and it can create space for the decrease of labour taxes in EU Member States. Also another candidate for sustainability-oriented tax-based own resources, a financial transactions tax, has the potential to close some of the existing sustainability gaps. It can support fair tax competition, strengthen the role of corrective taxes, and can help to fight tax evasion and tax fraud.” says Danuše Nerudová.

Several other potential candidates, as a carbon tax or a carbon-based flight ticket tax, could particularly strengthen environmental sustainability, as required by the EU 2020 strategy, the Sustainable Development Goals, and the Paris Agreement.

Sustainability-oriented evaluation criteria

The criteria that the research group is using to evaluate possible (tax-based) EU-own resources go beyond the criteria established by the European Commission and the inter-institutional High Level Group on Own Resources (HLGOR) and the conventional criteria put forward in the literature. The innovative approach taken within FairTax research towards the reform of the EU system of own resources rests on sustainability-oriented criteria. Margit Schratzenstaller explains:
“The sustainability-oriented criteria we have elaborated include four dimensions of sustainability: Economic, social, environmental, and cultural/institutional sustainability.”

So, what are the most important arguments to implement certain taxes as EU-own resources?
“By implementing new sustainability-oriented taxes or by using existing ones to fund the EU budget, tax competition at the national level due to mobility of the tax subjects and/or tax bases could be avoided, as in the case of carbon taxes or a tax on net wealth. Moreover, cross-border externalities may result in suboptimal levels of national tax rates. We also argue that unilateral tax measures may reduce pressure on other countries to implement unilateral tax measures themselves, as they can act as free-riders – for example with regard to carbon taxes. There are of course several issues and potential problems with sustainability-oriented EU own resources that need to be addressed. In particular, stronger sustainability-orientation of EU expenditures is a central prerequisite for making tax-based own resources attractive for EU citizens.” Margit Schratzenstaller concludes.

Photo: Policy panel, from left: Hans Jörg Schelling, Eric Frey (moderator), Iveta Radičová, Heinz Zourek

The conference was rounded up by a policy panel, to create a link from research to policy-makers. The policy panel consisted Iveta Radičová, former Prime Minister of Slovakia, Hans Jörg Schelling, Federal Minister of Finance of Austria, and Heinz Zourek, former Director General of the European Commission’s Directorate General on Taxes and Customers Union (DG TAXUD). One of the panel’s main points was that Europe is facing great challenges, and currently there is no space to discuss implementation of tax-based own resources (as desirable they may be in principle, e.g. carbon-based taxes). However, panellists agreed that it is vital that scientists continue researching the topic to have results and concepts at hand, should future windows of opportunities open. Mario Monti, head of the HLGOR, sent a video message to underline the importance of a future-oriented discussion about alternative own resources for the EU budget. See the video message below:

For more information, please contact
Margit Schratzenstaller:
Danuše Nerudová:

See also:
FairTax research on Revisioning the EU's jurisdiction over tax policy norms (WP1)
FairTax research on Gender equality and income inequalities in fiscal policies (WP3)

Editor: Elin Andersson