THE EU BUDGET REVENUE SYSTEM

The EU revenue system should be considered in the context of the highly innovative and evolutionary nature of the European Union, which is neither an international organisation nor a federal state. Originating from the decision by its member states to pool selected aspects of their respective sovereignties, the EU's powers are founded on the principle of representation of interests.

The EU framework is based on a dual legitimacy, which "brings together states and peoples via a unique form of political integration", in a process of governance 'without government' organised around a single institutional framework. The European Union constitutes a new legal order of international law, the subjects of which comprise not only member states but also their nationals.

The EU revenue system has been a subject of intense debate for years, in particular concerning the nature of the resources financing the EU budget. Many academicians have provided detailed reviews of the functioning and peculiarities of the system and have formulated a number of proposals to address its drawbacks. Still, the EU revenue system seems unalterable. In particular, no satisfactory solution has been found to make visible to citizens their contribution to the EU budget (some &8364;140 billion in 2013, or an average of almost &8364;280 per capita).

EU revenue: A short history

The evolution of the EU budget financing can be charted along the following timeline.

1952-1969. The European Coal and Steel Community (ECSC, 1951, Treaty of Paris) was entitled to procure the funds necessary to carry out its tasks by setting levies on the production of coal and steel, which might be defined as the first Community tax (Article 49 ECSC). By contrast, the Treaty of Rome (EEC, 1957) provided that the budget of the European Economic Community would be initially financed from member states' contributions (Article 200 EEC), as shown in Table 1, with the option of replacing them by Community's own resources at a later stage (Article 201 EEC).

Member states' contributions were based on a percentage scale provided for in the Treaty, differentiated according to the type of expenditure (administrative or operational). These scales were the result of a political agreement, although close to countries' share in gross domestic product (GDP) at that time. The Council was entitled to modify the scales, by unanimous agreement. This happened notably in order to fund agricultural spending.

1970-1984. In 1970, after long and difficult negotiations, member states agreed that "the Communities shall be allocated resources of their own" and that "from 1 January 1975 the budget of the Communities shall, irrespective of other revenue, be financed entirely from the Communities' own resources". As a result, from 1971, customs duties, agricultural duties, and sugar and isoglucose levies (called 'Traditional own resources' or TOR) collected at EU entry were gradually transferred to the EU budget. In order to cover the administrative expenses for their collection, 10% of TOR was retained by the member states. Member states' contributions fr