3 days ago
EU to tax tobacco, large companies to fund next budget
Whilst EU countries want an ambitious budget, they will also have to repay the bloc's €650 billion covid loans from 2028. The budget proposals must be approved unanimously. Euractiv is part of the Trust Project Eddy Wax and Jacob Wulff Wold Euractiv Jul 12, 2025 15:19 2 min. read News
Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.
The European Commission is hoping all EU countries can agree on new taxes on tobacco, large companies, electronics waste and carbon emissions to fund the EU budget, according to a draft proposal seen by Euractiv.
The bloc's members are straining their finances, but the Commission wants an ambitious 2028 to 2034 budget (MFF) to boost competitiveness and defence.
Direct contributions based on GNI, which financed 56% of the previous budget, "will reach its limits as financing needs increase," writes the Commission in its draft, before presenting its proposal for five new EU-level income sources.
A Tobacco Excise Duty Own Resource (TEDOR) would "generate significant revenue" and also help towards the EU's health policy objectives. The document does not detail the excise duties, but Euractiv previously reported that the Commission has considered a 139% tax hike on cigarettes.
A Corporate Resource for Europe (CORE) would tax companies with a permanent establishment in the EU and over €50 million in annual net turnover.
To aid its green ambitions, the Commission proposes new contributions based on electronics waste. Two carbon levies which have already been floated – ETS1 and CBAM – will tax emissions inside and outside the EU. These proposals will stir debate among EU countries, which must approve them unanimously. To sweeten the deal, most ETS revenues would go to national budgets, and a temporary "solidarity adjustment mechanism" would balance differences between winners and losers of the new system.
Proposals from 2020 and 2023 have not progressed much in the council, but the next budget is a unique opportunity.
It is very difficult to agree on new revenue sources without also discussing expenditure, one EU diplomat told Euractiv this week.
Whilst EU countries want an ambitious budget, they will also have to repay the bloc's €650 billion covid loans – known as the Recovery and Resilience Facility – from 2028. The EU will dedicate roughly one-fifth of its current annual budget size to these repayments (equal to €25-30 billion each year).
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