Key facts
- European institutions are pushing for an ambitious EU long-term budget with new revenue streams ('own resources').
- The European Commission's initial budget proposal was nearly €2 trillion, prioritizing economic competitiveness and defense.
- Member states are divided between 'frugals' seeking budget reduction and 'friends of cohesion' advocating for increased agricultural and regional funding.
- Proposed own resources include taxes on the Emissions Trading System, Carbon Border Adjustment Mechanism, e-waste, tobacco, and corporate tax.
- The European Parliament suggested a gambling tax, digital levy, and capital gains tax on cryptocurrency assets.
European Union institutions are intensifying pressure on member states to agree on an ambitious long-term budget, particularly by introducing new revenue streams known as 'own resources.' At a flagship conference in Brussels, European Commissioner for Budget Piotr Serafin pushed back against proposals for a 'frugal' budget, arguing that a smaller EU budget might not be cheaper for taxpayers and could lead to inefficiencies.
The core of the debate revolves around 'own resources' – EU-wide taxes designed to fund the bloc's budget, as opposed to contributions from national governments. Progress on this politically sensitive issue has been slow, with key countries like France, Italy, and Poland facing elections in 2027, increasing the urgency to finalize negotiations by the end of the year.
The European Commission initially tabled a budget of nearly €2 trillion in July 2025, prioritizing economic competitiveness and defense while reducing funding for agriculture and regional programs. This has led to a split between 'frugal' states advocating for budget cuts and 'friends of cohesion' supporting increased agricultural and regional funding.
European Commissioner for Defence Andrius Kubilius highlighted the need for increased spending, questioning the commitment to security in the face of potential conflict. To finance strategic priorities, European Commission President Ursula von der Leyen and Commissioner Serafin have urged member states to advance on 'own resources.'
Member states' positions on proposed revenue streams, such as those from the Emissions Trading System, Carbon Border Adjustment Mechanism, e-waste, tobacco excise duties, and corporate tax, vary based on their economic impact. The European Parliament has suggested additional sources, including a gambling tax, a digital levy, and a capital gains tax on cryptocurrency assets, which could yield up to €11 billion annually. However, 'frugal' countries, like Sweden, remain hesitant, concerned about disproportionate financial burdens on wealthier member states. European Investment Bank President Nadia Calviño and EU lawmaker Danuše Nerudová have both stressed the importance of approving new own resources to align the budget with Europe's ambitions and priorities.