The current system of own resources to finance the EU budget does not contribute to the overarching goal of sustainable growth
and development in the EU. Therefore, the current own resources, which primarily consist of contributions by Member States,
should be partially replaced by sustainability-oriented own resources. Such a reform would create space for Member States
to reduce their tax burdens (particularly high taxes on labour) in a supranational sustainability-enhancing tax shift. Candidate
resources are taxes or levies that cannot be effectively enforced at the Member State level due to tax competition and avoidance
and/or cross-border externalities, and that contribute to central European strategies and policies. A basket solution would
be preferable, consisting of "green" and other innovative own resources, so that potential negative effects on individual
countries could be cancelled out to some degree. We analyse several options for sustainability-oriented own resources and
provide estimates of their potential revenues. These options include various green own resources (a carbon-based flight ticket
tax, a border carbon adjustment for the EU emission trading system and a surcharge on national fuel taxes) particularly addressing
environmental problems, and other candidates which could contribute to further dimensions of sustainability (a financial transactions
tax, a net wealth tax and a CCCTB-based own resource). We also discuss the candidates for innovative own resources suggested
by the European Commission in its proposals for the next 2021-2027 MFF, namely a plastic-based contribution, a share in revenue
from auctioning emission trading certificates and a CCCTB-based own resource. Based on a summary evaluation considering a
number of sustainability criteria relevant to the assessment of own resources, we find that all the options considered are
in principle well-suited candidates, while none can be identified as the "perfect" candidate. We also analyse the legal basis
of the various candidates for sustainability-oriented own resources and find that almost all the candidates could be introduced
within the existing legal framework so that no Treaty changes would be required.
JEL-Codes:H3, H20, H23, E62
Keywords:EU budget, Multiannual Financial Framework, own resources, sustainabilty-oriented own resources
Forschungsbereich:Makroökonomie und öffentliche Finanzen