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The European Union (EU) has an independent parliament and civil service which is distinct from those of the 27 member states. It administers common laws between the member states and expenditure on common policies throughout the EU. To pay for this the EU has an agreed budget of €862 billion for the period 2007-2013. By comparison, the UK expenditure for 2004 alone was estimated at about €759 billion.
Setting a budget
The EU has three elements to its government: the Council of Ministers, the European Commission and the European Parliament. All three take a part in setting the annual budget. The Justus Lipsius building, the headquarter of the EU Council in Brussels The Council of the European Union (French: Le Conseil de lUnion européenne, German: Rat der Europäischen Union) is a governing body that forms, along with the European Parliament, the legislative arm of the European Union...
The European Commission (formally the Commission of the European Communities) is the executive body of the European Union. ...
The European Parliament is the directly elected parliamentary body of the European Union. ...
Revenue The EU obtains most of its revenue indirectly by payments from treasuries of member states. Revenue is divided into three categories.
Traditional own resources are taxes raised on behalf of the EU as a whole, principally import duties on goods brought into the EU. These are collected by the state where import occurs and passed on to the EU. States are allowed to keep a proportion of the revenue to cover administration.
 VAT based own resources are taxes on EU citizens derived as a proportion of VAT levied in each member country. VAT rates and exemptions vary in different countries, so a formula is used to create the 'harmonised tax base', upon which the EU charge is levied. The starting point for calculations is the total VAT raised in a country. This is then adjusted using a weighted average of VAT rates applying in that country, producing the intermediate tax base. Further adjustments are made where there is a derogation from the VAT directive allowing certain goods to be zero-rated. The tax base is capped, such that it may not be greater than 50% of a country's Gross national income (GNI). The EU applies a call-up rate to the tax base, generally of 0.3%, but this is varied for some countries. For 2007-2013 the rate proposed for Austria is 0.225%, and Germany 0.15%, the Netherlands and Sweden 0.1% Image File history File links EUrevenuesources2004. ...
GNI based own resources currently forms the largest contribution to EU funding. A simple multiplier is applied to the calculated GNI for the country concerned. This is the last recourse for raising funding for a budget year, so the actual figure is adjusted within predetermined limits to obtain the budget total required. Revenue is currently capped at 1.24% of GNI for the EU as a whole.
Expenditure The largest single expenditure item is the Common Agricultural Policy (CAP) at around 45% of the total budget. The second largest element is the regional policy, at 30%. Foreign policy consumes 8%, administration 6%, research 5%. Image File history File links No higher resolution available. ...
The Common Agricultural Policy (CAP) is a system of European Union agricultural subsidies and programmes. ...
The Regional policy of the European Union is a policy with the stated aim of improving the economic well being of certain regions in the EU. Around one third of the EUs budget is devoted to this policy, the aim of which has been stated to be to remove...
Criticisms - "As it stands today [in 2003], the EU budget is a historical relic. Expenditures, revenues and procedures are all inconsistent with the present and future state of EU integration." - The Sapir Report, 2003, p 162.
An Agenda for a Growing Europe, also called The Sapir Report, is a report on the economy of the European Union edited by a panel of experts under the direction of André Sapir and published in July 2003. ...
See also In 2006, the European Union is the biggest economy in the world with 30,30% of GDP (World Bank, Total GDP 2005). ...
The Common Agricultural Policy (CAP) is a system of European Union agricultural subsidies and programmes. ...
The Common Fisheries Policy (CFP) is the fisheries policy of the European Union. ...
The Regional policy of the European Union is a policy with the stated aim of improving the economic well being of certain regions in the EU. Around one third of the EUs budget is devoted to this policy, the aim of which has been stated to be to remove...
The given name Olav (Olaf, Olof, Olaus), the name of Saint Olav, patron of Norway, has also been borne by a number of other Norwegian kings. ...
The Directorate-General for Budget is a Directorate-General of the European Commission. ...
References - EU discussion of revenue
- EU Breakdown of revenue
- EU financial report 2004
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