European Fiscal Capacity and New Own Resources: Proposals and Scenarios

Olimpia Fontana and Luca Gasbarro - June 2021

The paper addresses the issue of the introduction of fiscal capacity in the European Union. It starts with a brief overview of the debate on the creation of a fiscal capacity in the Eurozone. Next it considers the strengthening of the EU budget in the wake of the innovations introduced at the institutional level with the Next Generation EU. In particular, we identify five sectors for new European own resources: gambling, tobacco consumption, CO2 emissions, tax avoidance and financial transactions, and provide an estimate of the revenue that a European tax could generate for each of these. This revenue could be assigned to the EU budget, both for economic stabilisation and the allocation of European public goods.

Keywords: fiscal capacity, European own resources, Next generation EU, stabilization function, European public goods, carbon tax, tax avoidance, financial transactions tax

Olimpia Fontana is Mario Albertini Fellow at Centro Studi sul Federalismo

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Luca Gasbarro is chartered accountant junior partner at Studio Legale e Tributario Fantozzi & Associati

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