A Reform Proposal

Part of the ZEW Economic Studies book series (ZEW, volume 40)

The preceding analyses have resulted in a plethora of insights. These serve as a basis for our reform proposal and can be summarised in the following manner:

It was shown that some of the prominent reform proposals may not be as convincing as their proponents suggest. As one of the strengths of the status quo, the successful capping of the budget through the own resources ceiling and the national budgetary self-interest of Council members in an economical use of EU resources should be pointed out. Like any other federal level the EU level is not immune to inefficient spending pressure resulting from the common pool problem or centralisation interests so that incentives for fiscal discipline must be ensured. The fact that the current own resources system establishes a direct budgetary link between national budgets and the EU budget is an important element of fiscal discipline since this explains the reliable interest of the Council in budgetary discipline at the EU level. An EU tax would not only tend to cut that helpful link. A further major disadvantage of any conceivable tax has been demonstrated through the calculation of the substantive redistributive effects of any of the discussed tax bases (see section 5.2.4). Instead of neutralising the “juste retour” debate, any of the debated taxes would rather intensify disputes on correction needs.


Policy Area Correction Mechanism Reform Proposal Fiscal Discipline Refund Rate 
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© Physica-Verlag Heidelberg 2008

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