On Jan. 16, the European Parliament approved the draft EU bill for the introduction of four new direct taxes to be paid as part of financing the Next Generation EU (“recovery fund”). The new taxes are expected to bring €22 billion into the pockets of the EU Commission. This is intended to be a leap forward in the creation of a supranational government, with its own finance ministry and its own revenue system. The four levies are:
1. A 3% corporation tax. Each state will tax its share of profits at its own national tax rate. Withdrawals of €12 billion per year are expected;
2. Emission quotas, or a 20% share of the proceeds from the auctions of the EU “greenhouse gas” trading system. States usually auction off some of the allowances purchased by companies to offset their emissions. Part of the proceeds (about €3 billion per year) will end up in the EU coffers;
3. The so-called plastic tax, i.e. a national contribution linked to the amount of non-recycled plastic packaging waste. The withdrawal rate could be equal to €0.80 per kilogram. This would result in a total revenue of €7 billion per year; and
4. A reform of the current EU revenues is also on the way, which provides for the maintenance of customs duties (as a direct levy), with the provision of a simplification of VAT and a reduction from 20% to 10% of the percentages that member states retain as “collection costs.”
