Agency Report –
German Finance Minister Lars Klingbeil rejected the European Commission’s long-term EU budget proposal on Thursday, arguing that the proposed measures would not fly in the current economic climate.
On Wednesday, the commission proposed a long-term EU budget of €2 trillion ($2.3 trillion) for the years 2028 to 2034, arguing that the roughly €700 million in new funding was necessary to address Europe’s challenges and strengthen the bloc’s independence.
Germany has pushed back, however, arguing that such an increase is not acceptable given the current strains on national budgets.
“We absolutely must remain proportionate regarding the finances. I do not see this as being given,” Klingbeil said on the sidelines of a meeting of G20 finance ministers in the South African city of Durban.
The German government wants to strengthen the economy, secure jobs and attract investment, Klingbeil said, arguing that the corporate taxation proposed by the commission sent the wrong signal.
The European Union’s executive is proposing a levy for large companies with more than €100 million ($116 million) in annual turnover, as one of several new income sources for the 2028-34 budget.
Additionally, 15% national tobacco tax revenues should flow into the bloc’s communal budget – a measure that Klingbeil criticized, arguing that Germany could not back the proposal.
Budget wrangling
The bloc’s budget, dubbed the multi-annual financial framework, spells out the European Union’s policy priorities for the coming years and how much money is allocated to different areas.
The majority of the long-term EU budget is financed by contributions from the member states, with each state paying a certain percentage of its gross national income. As the EU country with the strongest economy, Germany usually contributes just under a quarter of the available funds.
The proposed budget increase however could in part be financed through new sources for additional revenue, with the commission aiming to mobilize another €58.5 billion annually.
The commission aims to reform the trillion-euro budget by focusing more strongly on expenses related to defence and competitiveness, adding new sources for revenue and changing funding criteria.
In concrete terms, the proposal envisages a tax on e-waste not collected for recycling, besides the levy on large companies and tobacco revenues.
In an initial reaction on Wednesday, German government spokesman Stefan Kornelius rejected the measures, while praising the commission’s attempt to reform and the refocus of the budget on new priorities.
The proposal is to be debated and amended by the European Parliament and EU member states before its final approval. Negotiations are expected to be lengthy and contentious.
By Theresa Münch, Doris Pundy and Katharina Redanz
