Brexit Costs: EU Commissioner Proposes EU-Wide Climate Tax

Due to Brexit and other new commitments, the EU will soon be short of € 25 billion. As a new source of revenue, EU Budget Commissioner Günther Oettinger is proposing to introduce a EU-wide CO2 tax. Germany could be a beneficiary.

As a result of Brexit and because of many new tasks the EU budget will be missing € 25 billion. EU Budget Commissioner Günther Oettinger, therefore, wants to introduce new revenues for the EU in form of a climate tax. In addition, he wants to take Brexit as an opportunity to remove not only Britain’s EU rebate but similar discounts for other EU member states.

“When the British leave, the rebate negotiated by Maggie Thatcher falls away; I want to use this opportunity to cancel all discounts, including those for Denmark and Germany,” Oettinger told SPIEGEL. “After the departure of the British, we are likely to be short of at least € 10 billion a year,” he said. “I can imagine that half of this sum can be saved, and the remaining members will divide the other half among themselves,” the EU Commissioner said. Germany, for example, receives a discount on the additional costs incurred as a result of the British discount.

But it’s not just Brexit that is causing a hole in the EU budget. EU members states are facing many new tasks such as in defense, development aid or the safeguarding of external borders. The additional financial requirement of these new commitments is estimated to be 15 billion euros. This is why Oettinger intends to present a discussion paper on the future financing of the EU next Wednesday which will include proposed cuts in existing funding programmes. Apparently, cuts in the agricultural budget, which is still amounting to almost 40% of all EU spending, are being considered.

Oettinger also wants to open up new sources of income for the EU. To this end, EU member states are to transfer part of their tax revenues to Brussels. “One consideration is to use the topic of climate protection and to transfer the taxation of EU CO2 credits to the EU,” Oettinger said. “These CO2 credits are based on European legislation, but they have so far gone to member states.”

The advantages for the EU members are obvious, Oettinger said. “To date, Germany’s contributions to the EU come from the federal budget, but environmental taxes are paid by a steel producer from Luxembourg or by a chemical company from Rhineland-Palatinate, which would reduce the contribution from national budgets.”