Revenue
The EU's revenue system needs a serious rethink. It has become a complex, opaque maze that makes it harder for citizens to see where their money goes and what it actually achieves.
The Commission's proposal for the 2028-2034 period aims to expand the EU's fiscal reach by generating €58 billion a year through a new battery of levies on everything from corporate turnover to tobacco and e-waste. While these are presented as ways to lighten the load on national budgets, EPICENTER is concerned they represent a shift toward centralisation without a clear functional boundary. We believe in a simple rule: any new EU revenue must be matched by an equal cut in national taxes to keep the total burden on families and businesses neutral.
A coherent fiscal logic is missing
The current approach to new own resources lacks a coherent fiscal logic. Rather than establishing a transparent fiscal base, the package aggregates multiple partial mechanisms with different economic rationales and incidence. The proposed corporate contribution (CORE) is a levy on a company's size rather than its actual profitability, which risks undermining Europe's attractiveness for investment. The e-waste levy creates a structural misalignment where the EU budget relies on member states failing to hit their environmental recycling targets.
The most significant concern is the move toward making common debt a structural fixture of the Union. Borrowing hundreds of billions for industrial subsidies is not a long-term solution to our investment gap; it risks crowding out private capital and saddles future generations with the bill.
There is a more constructive path forward. Instead of new taxes and joint debt, the EU should focus on the reforms that would actually release Europe's wealth. By fixing fragmented capital markets and moving toward funded pension systems, we can mobilise trillions in private capital for innovation. A responsible revenue framework is one that stays within the 1% GNI limit, remains transparent, and respects the taxpayers who fund the European project.
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E-waste
TEDOR (Tobacco Excise)
CORE (Corporate)
EU Borrowing & Debt
Non-Tax Revenue Fund
Alternative Revenue Sources
The Commission's proposal introduces a new levy on uncollected electronic waste, set at €2 per kilogram. While framed as an environmental incentive to support the circular economy, EPICENTER believes the design is fundamentally flawed.
A levy projected to generate up to €15 billion per year is incompatible with a genuine incentive design. If the instrument succeeds in improving collection rates, revenues collapse, creating an implicit fiscal interest in continued non-compliance. The WEEE Directive already mandates collection of 65% of average weight placed on the market. A fiscal instrument built on the assumption that this gap persists indefinitely is not an environmental policy; it is a revenue tool dressed as one. Furthermore, a uniform levy applied across member states would have uneven effects, disproportionately affecting countries with less developed collection infrastructure.
Real progress comes from infrastructure investment and rigorous enforcement of existing binding targets, not from layering new taxes onto an already complex system. EPICENTER recommends rejecting the e-waste own resource in its current form. If any instrument is retained, revenues must be hypothecated to WEEE infrastructure and rates differentiated by member state capacity.
The harmonisation of tobacco excise duties in the EU was originally driven by the need to ensure the proper functioning of the internal market. Significant differences in national excise regimes risked distorting competition and undermining the free movement of goods. The introduction of minimum excise levels was a market-correcting mechanism aimed at preserving a level playing field across member states.
The ongoing revision of the Tobacco Tax Directive (TTD) broadly follows this logic. It expands the tax base to include new products such as electronic cigarettes, heated tobacco, and other emerging nicotine products, reflecting changes in consumption patterns and potentially closing regulatory gaps. It also envisages a gradual increase in minimum excise levels. The economic and public health effects of these changes remain subject to debate, but the direction is consistent with the original market-integration rationale.
However, the proposal to allocate a share of tobacco excise revenues to the EU budget (TEDOR) represents a significant departure from this established logic. Under the Commission's plan, the EU would apply a call rate to revenues generated from harmonised minimum excise rates, claiming 15% of those revenues. The Commission estimates this would generate approximately €11.2 billion annually.
EPICENTER believes the coordination of excise duties at EU level was designed to preserve the functioning of the single market, not to create a basis for supranational revenue extraction. The fact that a tax base is harmonised does not justify its partial centralisation. Tobacco excise revenues vary substantially across member states, and redirecting a portion to the EU would have uneven fiscal effects.
Our position: support the TTD revision as a tool for market integration and oppose TEDOR becoming only a tool for revenue extraction. Tobacco excise revenues should remain at the national level. Any move toward excise-based EU financing should start with an independent impact assessment and be strictly revenue-neutral.
The Commission proposes a graduated turnover-based levy on firms with annual net turnover above €100 million, generating an estimated €6.8 billion annually from approximately 25,000-30,000 companies. EPICENTER opposes CORE fundamentally because it taxes scale rather than profitability. By applying the levy irrespective of financial performance, the EU risks damaging its global competitiveness and discouraging investment.
CORE establishes a de facto supranational corporate tax without the necessary Treaty change. A substantial body of economic literature shows that corporate tax burdens are not borne exclusively by shareholders; a significant share is shifted onto workers through lower wages and transmitted along value chains to smaller firms and households.
EPICENTER recommends withdrawing the CORE proposal entirely. Rather than creating new layers of corporate taxation, the EU should prioritise completing the Capital Markets Union and removing the regulatory barriers that currently hinder private capital from flowing into European innovation.
The Carbon Border Adjustment Mechanism (CBAM) prices carbon embedded in imported goods to match the costs faced by EU producers. While intended to prevent carbon leakage, the Commission proposes redirecting 75% of these revenues to the EU budget. EPICENTER believes this mechanism faces significant hurdles, including the near-impossible task of accurately assessing the carbon content of imports and the risk of penalising European exporters who lose access to free allowances.
EPICENTER's preferred path is to suspend the mechanism and reinstate free CO2 allowances to protect industrial competitiveness. If CBAM remains in place, revenues should be explicitly linked to financing cross-border energy interconnections rather than general spending.
The EU Emissions Trading System (ETS) is a cornerstone of climate policy, but its role as a revenue source for the EU budget is contentious. The Commission proposes to retain 30% of ETS1 auction revenues, which would otherwise go to member states. In 2023, total ETS auction revenue reached €43.6 billion, with €33 billion going directly to member states. EPICENTER believes redirecting these funds risks creating a structural dependency on the pollution the EU aims to eliminate.
EPICENTER recommends that ETS revenues be returned entirely to member states. National governments should use these funds to lower distortionary taxes on labour and energy, ensuring the green transition remains economically sustainable.
The normalisation of common debt is perhaps the most significant shift in EU fiscal policy. Originally a one-off response to the pandemic, joint borrowing is now being positioned as a permanent tool to fund industrial subsidies and competitiveness. The liabilities incurred under NGEU, amounting to around €750 billion, have created a long-term repayment obligation now being integrated into the regular budget, with annual debt service of approximately €20 billion.
Common borrowing in an economic union creates a "commons problem": the costs of debt are partially shared across member states while the benefits remain largely national. Large-scale public borrowing risks crowding out private investment. The problem is not a lack of savings but their inefficient allocation, most notably through underdeveloped funded pension systems which limit investable capital.
EPICENTER recommends a return to the principle of a balanced budget funded by national contributions. Joint borrowing should remain strictly limited to clearly defined, temporary, crisis-related circumstances. The EU should complete the Capital Markets Union and generalise pension fund capitalisation across member states. Releasing Europe's €8 trillion in dormant private capital is a far more sustainable way to fund innovation than expanding supranational debt.
The Commission has proposed a new "Fund for Non-Tax Revenues" to streamline various income sources, such as fines, fees, and interests, into a more flexible pot. While centralising these flows might seem like a technical improvement, EPICENTER believes it risks reducing transparency and weakening the link between specific policy actions and their financial consequences.
EPICENTER recommends that non-tax revenues remain clearly disaggregated and transparently reported. Any surplus from fees or fines should be used exclusively to reduce member states' GNI-based contributions.
Financial transaction taxes increase the cost of capital and reduce market liquidity. Digital taxes often result in retaliatory trade measures or higher costs for consumers and small businesses. These proposals frequently ignore that taxes are ultimately borne by people, not faceless entities.
EPICENTER recommends rejecting these alternative levies. The most pro-growth strategy for the EU is not to find new things to tax, but to foster an environment where private wealth is created through deregulation and trade. True fiscal sustainability comes from a larger economic base, not a higher tax rate.
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