for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

FACTBOX-Sources of financing for 750 bln euro EU recovery package

BRUSSELS, Sept 16 (Reuters) - European Union governments are considering a number of new EU-wide taxes that would allow the 27-nation bloc to repay the planned 750 billion euros ($888 billion) of borrowing for boosting the economy after the COVID-19 pandemic.

Because tax matters in the EU must be decided by unanimity and repayment of the borrowing does not start until 2028, complex decisions on the taxes may take several years.

Below are the taxes under consideration.

PLASTICS TAX

This has already been decided and will apply from Jan. 1, 2021. Tax will be calculated on the weight of non-recycled plastic packaging waste at 0.80 euro per kg, with a mechanism to avoid some countries paying much more than others. The executive Commission estimates revenues could reach 7 billion euros annually.

EMISSIONS TRADING SYSTEM EXTENDED TO SHIPS AND PLANES

The Commission is to propose how to revise the existing system of auctioning off rights to emit CO2 in the EU, now applying mainly to the energy sector and industry, to include the maritime sector and aviation. It would possibly gradually raise the price for each tonne of CO2 and reduce the amount of free emissions as the EU comes closer to its goal of not emitting more CO2 than is absorbed by 2050.

According to the Bruegel think-tank, which prepared a study on the various taxes for EU finance ministers, the revised ETS system could be the biggest source of new revenue for the EU, providing 800 billion euros by 2050 in a realistic scenario, 329 billion euros in the most conservative scenario and even 1.5 trillion in the best scenario.

CARBON BORDER ADJUSTMENT TAX

In the first half of 2021, the Commission is to present a proposal for a tax that would be charged on goods imported from places which do not observe the EU’s stringent climate protection goals.

According to the Bruegel paper, it could yield between 36 and 83 billion euros in 2023, a large amount given that customs duties on all products imported to the EU in 2018 amounted to only 25 billion. The Commission’s estimates are more conservative at 5 to 14 billion euros a year.

The levy, advertised as a measure to protect EU companies that will have to abide by costly environmental and climate regulations from unfair competition in places with laxer rules, would have the potential to trigger trade conflicts with the United States and China.

DIGITAL SERVICES TAX

A minimum tax on digital giants like Google, Amazon, Facebook, Apple or Microsoft and where it should be paid, is being discussed in the Organisation for Economic Cooperation and Development (OECD) to find a global solution.

But if there is no agreement on it this year, the Commission is to propose in the first six months of 2021 how the EU on its own should tax them.

The Bruegel study says revenues from such a levy would be limited. The Commission estimated in 2018 that a 3% tax on the gross turnover of companies with total revenues above 750 million euros and EU revenues above 50 million euros would yield 5 billion euros annually. In May 2020, the Commission lowered this estimate to 1.3 billion euros.

FINANCIAL TRANSACTIONS TAX

EU leaders did not set any particular date for the introduction of a financial transaction tax (FTT), wary that discussions on it have been ongoing since 2010 and have failed to get enough support from governments.

According to early plans, the tax was to be 0.1% of the value of shares and bonds and 0.01% of derivatives traded between financial institutions. Commission estimates from 2011 said the levy could raise 57 billion euros annually.

Talks on the FTT are to continue over the next seven years.

$1 = 0.8450 euros Reporting by Jan Strupczewski; Editing by Andrew Cawthorne

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up