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Direct tax on EU citizens proposed

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Commissioners have propoxsed the introduction of a direct tax on citizens to help pay for the European Union

Commissioners have propoxsed the introduction of a direct tax on citizens to help pay for the European Union

Commissioners have propoxsed the introduction of a direct tax on citizens to help pay for the European Union

A direct tax on EU citizens to help pay for the European Union was at the heart of sweeping financial reforms plans unveiled by the Brussels Commission.

The budget review plan also throws down the gauntlet to Prime Minister David Cameron over Britain's multibillion-pound-a-year rebate on the country's EU costs - suggesting that the "Byzantine" deal is past its sell-by date and should be scrapped.

On Tuesday afternoon the Commission insisted it was only setting out "options" for consultation, but the ideas will be seized on by eurosceptics as a new power grab for national sovereignty.

The Commission says the way the EU raises financing has become unwieldy and complex, cobbled together from a mix of "own resources" - principally a share of each member states' VAT revenues and customs and excise duties - and contributions from national exchequers.

The consultation paper on future EU financing says the current system is a "confusing and opaque" mix of contributions from national budgets, coupled with "rebates" to some member states.

Those rebates include the 25-year old UK "discount" which will save the Treasury £3.1 billion this year alone - and a total of £26 billion between 2007 and 2013, when the current EU budget cycle ends.

The post-2013 budget system must give greater added-value, says the report.

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The Commission suggests abolishing the VAT share and "progressively introducing one or two new own resources as a replacement."

The document suggests EU funding could come in future from "an EU charge related to air transport, a separate EU VAT rate, a share of an EU energy tax or of an EU corporate income tax."

Other possibilities listed are "a share of a financial transaction or financial activities tax and the auctioning of greenhouse gas emission allowances".


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