asked the Minister for Foreign Affairs if he favours a GNP based, a VAT based or a mixed GNPVAT based system of national contributions to the EC budget; and whether he expects the present controversy over the various options within the EC budget reform package to be settled in the near future.
Written Answers. - EC Budget.
17.
The Own Resources of the Community at present consist of three main elements: (i) Agricultural and sugar levies; (ii) Customs duties; (iii) A proportion of the harmonised VAT base of the member States. At present this proportion stands at 1.4 per cent.
In the system of future financing proposed by the Commission in February, the first two elements would remain largely unchanged, the VAT element would be reduced to 1 per cent and there would be a fourth resource consisting of a uniform levy on a new base defined as the difference between GNP and the VAT base.
In the discussions of the Commission proposal, the debate has centred on the VAT call-up rate and the fourth resource.
The Conclusion of the European Council in June stated that "the financing system should, as proposed by the Commission, take greater account of the proportionality of contributions in accordance with the relative prosperity of member States". The Conclusions were agreed by 11 member states, including Ireland.
GNP is the internationally recognised yardstick of a country's relative prosperity. The most appropriate response, from Ireland's point of view, to that Conclusion of the European Council, would be a system of contributions based on shares of Community GNP. Such a system would maximise the element of proportionality.
The least satisfactory system for Ireland would be a continuation of the present VAT based system, which weighs relatively heavily on some of the least prosperous member states, including Ireland.
A system based entirely on GNP poses difficulties for some member states. Furthermore, the Government recognises that the system likely to emerge eventually may well be a mixed system, incorporating elements based on VAT and on GNP. On this basis therefore, and in an effort to be constructive and to promote agreement, Ireland has supported the revenue system proposed by the Commission. The Commission proposal has the advantage that over time and with the growth of the Community budget, the system would become fully proportional to GNP.
The Taoiseach will report to the House after Question Time today on the outcome of the European Council in Copenhagen. Final agreement was not reached at the meeting, and the European Council will resume in Brussels on 11-12 February. I am confident that this item and the other aspects of the Community financing package can be agreed at that stage.