Ireland hails EU tax agreement on carbon imports and electronic waste

BRUSSELS — The Irish Council presidency welcomed “consensus” among governments to introduce new EU-wide levies on foreign polluters and electronic waste to finance the bloc’s next seven-year budget, according to a document seen by POLITICO.

The EU’s 27 countries are narrowing down a list of potential new taxes, or own resources, to fund the bloc’s common cash pot as negotiations enter their crunch phase.  

Introducing new EU-wide levies is crucial to lay the groundwork for a budget agreement by the end of the year, before national elections in France, Spain and Italy in 2027 threaten to disrupt the negotiations.

The president of the European Council, António Costa, urged national leaders to home in on several potential taxes during their next gathering in Brussels on Oct. 15. Supporters argue that own resources are essential to generate more revenue and reduce national contributions to the EU from 2028 to 2034.

With less than four months to go until the informal deadline, the bloc’s governments have shown openness towards a tax on foreign carbon imports, officially known as the Carbon Border Adjustment Mechanism (CBAM), and a separate levy on non-collected electronic waste.

“Of the Commission’s proposals for new Own Resources, the most consensual among Member States is CBAM, with many open to increasing the call rate further,” the Irish Council presidency, which is steering discussions, wrote in a note to EU governments seen by POLITICO.

Under current rules, capitals must funnel 75 percent of CBAM revenues to the EU budget, and retain 25 percent for their domestic budgets.

CBAM is expected to generate, on average, €1.644 billion per year, roughly adding up to €11.5 billion for the whole budget cycle, according to an updated estimate by the European Commission seen by POLITICO.

The Irish presidency also noted “a broad degree of support” among governments towards the electronic waste tax, which is expected to generate €17.9 billion per year. They added that criticism towards the levy largely focuses on statistical issues.

More EU taxes

France is leading the charge to introduce more EU taxes to generate extra revenue and further reduce national contributions to Brussels.

Last year, the Commission proposed five new levies — targeting carbon imports, emissions trading scheme (ETS), non-collected electronic waste, corporate profits and tobacco products — worth €66 billion per year.

But most of the ideas — which must be approved unanimously by EU members — have been met with resistance from national governments.

The Irish presidency noted that “a group of Member States remain opposed to ETS.” The group includes highly polluting Eastern countries, such as Poland and Hungary, who want to retain the ETS revenues for their domestic budgets.

It also wrote that many governments criticized the tobacco tax and a majority opposed the corporate levy because it will undermine competitiveness.

In a bid to break the deadlock, the European Parliament last spring proposed new levies on online gambling, crypto firms and digital giants.

However, the Irish presidency threw cold water on these suggestions, noting that “most Member States were opposed to or doubted the ability for the EP proposals to be implemented by 2028.”

They added that few countries showed openness toward the digital levy, but others warned against “geo-political concerns” such as the threat of retaliation by the U.S.

Finally, Ireland noted that governments are divided around the idea of postponing repayments of the bloc’s post-Covid recovery fund, which are expected to cost €25 billion per year.