Daily Management Review

New Plastic Tax And Carbon Emission Trade To Fill EU’s Brexit Fund Gap?


The proposed EU budget from 2021-27 aims at carbon neutrality by 2050.

The chairman of the EU has proposed to fill up the gap in its “next long-term budget” which has been created with the exit of Britain from the bloc, whereby introducing a new tax on plastics and tapping on the funds of carbon emissions trade.One quarter of the budget presented by Charles Michel for “2021-27” at “1.074% of the EU’s gross national income” deals with moving towards turning carbon neutrality by 2050.
The Brexit gap is worth over “10 billion euros a year” in the EU funds as it was the second biggest contributor in the bloc.However, officials are hoping to generate an annual revenue of “14 billion to 15 billion euros” from “the plastics tax” and “augmented carbon trading scheme” which would be “more than enough to fill the gap”.The plastic tax would be at “0.8 euro per kilogram of non-recycled plastic packaging waste”, while the ETS of European Union would generate the carbon emission trade money for crossing the “average annual revenue per country generated by allowances auctioned over the period 2016-18”.
Moreover, the EU has other options of taxes which would include digital economy, air travel, financial transactions and on imported products manufactured with “high CO2 emissions”. However, the budget seems to be still higher than the “biggest net contributors” group which include “Germany, the Netherlands, Austria, Sweden and Denmark” as they don’t want it to go above “1.0%” while the figure of “1.07%” met with criticism. In the words of an EU diplomat of net contributor countries:
“It’s difficult to see how this proposal will form a basis for compromise”.
“The ceiling is too high, the modernisation too little. There remains a need for permanent corrections to ensure fair burden sharing”.
However, senior EU officials are of the opinion that the “1.074% of GNI” was “mid-point” that Michel acquired after consulting with twenty seven governments and arrived at a comprised starting point.Net payers get “rebates on contributions” while net beneficiaries want to scrap it and to ease the situation Michel suggested “lump-sum corrections for Denmark, Germany, the Netherlands, Austria and Sweden”.
Michel is of the opinion that EU funding need to made “conditional on governments” that respect the law, as many net payers would want it so especially to keep Hungary and Poland under pressure as they have been accused of “violating democratic checks and balances”.
Even though Michel proposes to dedicate “35% of the total” funds for equalising the standards of living across the twenty seven EU countries, he chucks of farmers support to “30%” which is often seen as an “outdated economic model”, while the bar for “the single market, innovation and the digital economy” went higher from “11.2%” to “13.7%”.
In fact, defence sector also sees a rise in spending besides spreading the influence of the EU in the world.