Changing role of vat based resource in the EU’s budget

Szigeti, Cecília

Keywords: budget, VAT based resource, upper limit, regressivity, structural changes

Having joined the EU we also have to take part in financing of the common budget. The income part of the EU budget, the system of own resources, has been developed gradually and is still being elaborated. The relative decline of VAT based resources is the most significant development of recent years. It has changed little from one year to the next, but over a period of a decade the structural change was significant. Based on several different assessments the VAT income in member states is relatively high in lower income countries, therefore the introduction of a VAT based upper limit – 50% of GNI – moderates the regressive nature of resource. This is a favourable development for poorer member states such as Hungary, because their obligatory contribution to the common budget decreases.

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