First EU-wide taxes to pay for Covid debt
Electronic waste and carbon emissions could also be targeted in the drive to raise much-needed cash and pay off a €650 billion pandemic loan.
The European Union's executive arm will present the proposal to member states on Wednesday as part of the unveiling of plans for the bloc's next budget between 2028 and 2034.
Brussels raised €650 billion in joint debt to provide much-needed economic boosts to its pandemic-stricken economy.
But when the deal was signed off by member states in 2021, there was no agreement over how the money should be repaid
The EU is currently looking to set aside between €25 billion and €30 billion annually – equivalent to a fifth of its budget – to pay off the loan.
Using Brussels-mandated taxes – known as 'own resources' – would be the first time the Commission has supplemented its budget with levies it controls.
Eurocrats argue that the radical shift is needed to pay back the existing debt, but also to raise further cash to fund a continent-wide rearmament.
The taxation on tobacco products could raise €15 billion annually for the Commission, De Telegraaf, the Dutch newspaper, has reported.
Member states will be charged the tax based on the number of smokers in their country, meaning the likes of Greece, Germany and Bulgaria could be among the hardest hit by the levy.
It would in effect enforce an increase on the minimum excise rates on cigarettes and cigars, hitting those capitals that enforce lower rates, like Luxembourg.
Dozens of member states have been lobbying the Commission to include vapes, nicotine patches and heated tobacco in the scheme because of health concerns and cash already lost to illicit trade, estimated to be about €10 billion a year.
A separate tax could be introduced on companies with a net turnover of €50 million a year that have a permanent base in the EU.
The move could generate billions of euros to help pay off the Covid-era debt, but is seen as deeply unpopular and uncompetitive in member states.
Other revenue streams looking to be opened up include targeting a charge for non-recycled electronic waste and a handling fee for long-distance e-commerce packages.
The Commission is expected to unveil a proposal to increase that to €1.78 trillion, or 1.26 per cent of gross national income.
The hikes will likely be resisted by countries that pay the most towards the budget, including France, Germany, Denmark and the Netherlands.
When the plan is presented to member states on Wednesday, it will fire the starting pistol on a two-year scrap between national capitals and EU institutions in Brussels over the bloc's future finances.
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