Submitted by Political Commission 2: Internal European Affairs.

Adopted by the Federal Committee in Prague on 13 November 2022.

Re-adopted by the Federal Committee in Sofia on 30 March 2025.

 

JEF Europe,

• Recognising that within the EU, budgetary debates often reflect national interests, especially during times of crisis, as demonstrated by the COVID-19 pandemic and the 2022 energy crisis caused by geopolitical tensions and supply disruptions; Recognising the ongoing discussions on reforming the Multiannual Financial Framework (MFF) to address new challenges such as competitiveness, green transition, and defense, while ensuring financial sustainability and stronger EU autonomy in policy making;
• Highlighting the potential of the EU budget to provide public goods to the European public, to support the goals associated with EU policies, and to use its tools to carry out macroeconomic stabilisation function in times of economic downturns;
• Emphasising the important role fiscal integration has played in political integration projects such as the United States of America;
• Understanding the importance of regional convergence programmes and cohesion policy for economic and social development in Europe;
• Supporting the role EU-funded programmes play in facilitating a European citizenship and sense of belonging through exchange programmes, cultural trainings, improving the quality of education and training, and encouraging intercultural exchange as well as an understanding among Europeans;
• Drawing attention to the mismatch between the size of the EU’s budget and the potential benefit the EU could provide to its citizens through wellfinanced tasks that can be better carried out on the EU level in line with the principle of subsidiarity;
• Taking note of the apparent preference for smaller, ad hoc budgets rather than combined and permanent funds as part of the EU budget;
• Concerned by the extensive dependence of the EU budget on GNI-based and VAT-based contributions of Member States, which account for the bulk of the EU budget, and their unsustainable and unsteady nature as a source of EU revenue, as it happened for example with the exit of the United Kingdom;
• Noting with concern the contradiction between the importance of programmes that are geared towards youth and social policies for the European economy, and at the same time the budget limitations of the aforementioned programmes;
• Welcoming the European Social Fund Plus (ESF+), which plays a crucial role in employment, education, and social inclusion policies, while calling for increased funding to meet the evolving needs of European citizens and ensure stronger support for youth employment and skill-building initiatives;
• Stressing that some EU financed initiatives such as the Rights, Equality and Citizenship Programme contribute to upholding active citizenship and common European values, such as democracy, freedom, the rule of law, fundamental rights, equality, solidarity, sustainability and peace in all Member States;
• Noting with concern that many citizens are not aware of projects funded by EU funds and their benefits; moreover, noting that many distorted facts on the European budget adversely influence citizens’ opinion about the EU;
• Noting that the EU strives for cost-effective financial management, while acknowledging the need for continuous improvement in transparency, efficiency, and the strategic allocation of funds to maximise public benefit;
• Recognising the crucial role played by the European Court of Auditors, the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) in safeguarding EU financial interests, and supporting ongoing efforts to enhance anti-fraud mechanisms, strengthen oversight, and ensure effective use of EU funds;
• Welcoming the Next Generation EU fund and SURE, which introduced largescale European borrowing as a response to economic recovery, and recognising ongoing discussions about whether such joint debt issuance should become a permanent instrument for strengthening the EU’s fiscal capacity;
• Welcoming the Recovery and Resilience Facility (RRF) as a key mechanism for coordinating fiscal policies across Member States in a streamlined manner using a combination of grants and loans (blending), and emphasising the importance of ongoing implementation and evaluation to ensure its effectiveness in delivering sustainable investments and structural reforms;
• Welcoming the improvement of collecting own resources such as proceeds from the Carbon Border Adjustment Mechanism (CBAM) or the EU Emissions Trading System (EU ETS);
• Underlining that despite the Next Generation EU recovery and investment programme, the EU’s fiscal capacity remains constrained: the ‘own resources ceiling’ was temporarily increased to 2% of the EU’s GNI to facilitate borrowing for recovery, but this increase is limited until 2058 and does not provide a permanent solution for financial independence;
• Recalling the McDougall Report (1977), which estimated that a monetary union would require a Community budget of approximately 5-7% of GDP to effectively absorb economic shocks and ensure income convergence, and recognizing that the current EU budget remains well below this threshold, underscoring the need for further discussions on fiscal capacity as also outlined in the reports by Draghi and Letta (2024);

JEF Europe therefore,

• Welcoming the European Commission’s continued enforcement of the Rule of Law Conditionality Mechanism, including the suspension of EU funds in cases where violations of democratic principles and judicial independence threaten the financial interests of the EU, as demonstrated in recent measures concerning Hungary and Poland;

1. Calls for a reform of the MFF so that it reflects the priorities of the Union as a whole with these priorities:
   i. clarifying responsibilities in budgetary decision-making, ensuring democratic control over the budget by the European Parliament,
   ii. increasing the EU budget’s financial independence with the creation of own resources, and,
   iii. focusing expenditures on improving the European public goods that benefit everyone;

a) Institutional structure and decision-making:

1. 2. Calls for the MFF to be decided upon through the ordinary legislative procedure as the current unanimous decision in the General Affairs Council grants member states a disproportionate influence over the MFF in comparison to the European Parliament which merely needs to approve it through majority consent;
2. Invites the relevant parties to strengthen the democratic legitimacy of current expenditure and taxation via a reform of the duration of the MFF so as to align it with the five-year mandates of the European Parliament and the European Commission, while taking into account the necessity of the need for longer-term planning of programmes such as Cohesion Policy and the Common Agricultural Policy;
3. Supports a performance-based budget with stronger budget-line evaluation practices with field experts of different EU Funds for maximised effectivity of public spending;
4. Demands that the MFF setting continues to support subisdiarity and avoids a move to fully national plans;
5. Supports the strengthening of the European Court of Auditors, the European Public Prosecutor’s Office (EPPO) and the European Anti-Fraud Office (OLAF) to better detect and prosecute the misuse of EU funds within Member States, consult on better programming tools to contravene these misuses and provide tools to the European Parliament for better democratic oversight of the EU Budget;
6. Calls for the EU budget to be managed by a European Finance Minister, member of the European Commission;
7. Strongly asks for the adoption of the Commission’s proposal that would automatically increase the ceiling of the EU’s MFF, based on the revenues from the new own resources that have been accrued into the EU budget; further asks for an increase of the ceiling up to 5-7% of GDP as proposed in the McDougall report;
8. Asks for the Commission to be able to propose an outright increase for the ‘own resources ceiling’ for the EU budget in order to be able to flexibly increase the resources at its disposal;

b) Allocation of the budget:

9. Asks for the Commission’s budget to adequately reflect the concerns of European youth, especially in areas such as student and apprentice mobility (e.g. Erasmus+), youth unemployment, fighting climate change, and increasing the economic convergence of member states;
10. Stresses the importance of the Cohesion Fund both in assistance to less developed regions of EU, as well as in investing in transportation, environment, energy and digital infrastructures in Europe;
11. Emphasises that an increase in the European budget should finance public goods such as the preservation of biodiversity, access to water, access to education and skills, access to healthcare and strategic investment in research for better strategic autonomy in the field of innovation;
12. Emphasises the importance of having a strong social foundation at the core of the European project, and thus emphasising the importance of the European Social Fund+, Lifelong Learning programes, among other programmes;
13. Calls on the Commission and Member States to develop a strategy to make EUfunded projects more visible and communicate more clearly the benefits of the EU to citizens;
14. Emphasises the important role that the EU budget plays in EU accession talks, making sure that the allocation of the budget does not hinder the accession of candidate countries such as Ukraine, Moldova or Georgia, e.g. through the use of transition clauses in accession agreements.

c) Own resources of the EU:

15. Calls for a substantial increase in the size of the EU budget and a stronger diversification of its own resources and modes of using them (e.g. blending, loans etc.) to ensure financial stability and reduce reliance on Member State contributions, prioritizing revenue sources that align with EU policy goals and provide clear European added value, in line with the principle of subsidiarity;

16. Demands an increase in financial resources at the direct disposal of the EU which are not dependent on the political decisions of Member States, as well as the authority for the EU to collect and create new sources of public revenue, subject to democratic legitimation through the Parliament and the Council under the ordinary legislative procedure;

17. Asks for reducing the proportion of GNI-based contributions by Member States to the EU budget which should remain in place as a buffer in case of unpredictable emergencies, in favour of improving considerably its own resources, in particular by:
i. expanding the EU’s capacity to issue European bonds as a financing mechanism, ensuring a structured and sustainable debt ceiling, democratic oversight by the European Parliament, and clear repayment strategies to safeguard long-term financial stability;
ii. Stresses the need for the timely repayment of the Member States share of the NextGenerationEU recovery fund to avoid overburdening the EU Budget;
iii. Expanding the EU’s own resources through targeted revenue mechanisms that align with European policy priorities, including a Financial Transaction Tax (FTT) to complement the Capital Markets Union, enhance financial stability, and generate sustainable EU revenues, a Common Consolidated Corporate Tax Base (CCCTB) to ensure fair taxation within the Single Market and close loopholes in corporate tax avoidance and a reinforced Carbon Pricing Mechanism, integrating revenues from CBAM, EU ETS and other revenue sources to ensure adherance to the “polluter pays principle” inclimate transition efforts;
18. Further underlines the idea that new taxes should not become an additional burden to individual citizens; rather, the entire tax system must be redesigned to ensure that European, national and local authorities collect revenues for implementing the tasks done best at their respective levels: for instance, there is no need to collect certain taxes for climate action at the national level when the EU is a more suitable actor to address the climate crisis and needs adequate resources for this effort;
19. Asks for a more coordinated approach between Member States and the EU institutions to close taxation loopholes within the European Union;
20. Strongly ask in conclusion that Member States, EU institutions, and civil society need to collaborate in order to create an economically effective and socially inclusive EU budget, democratically supervised by a real fiscal policy, which would represent a stepping stone in achieving a politically united Europe.