EU sets up high-level group on "own resources" to work on budget

The European Union has formally established a high-level group on so-called "own resources" on Tuesday in a bid to study and therefore improve the current system for the EU budget.

The group was established by the Presidents of the European Commission, the European Parliament and the Council of the European Union in France's Strasbourg.

"This group will now study new ways to finance the European Union budget and - because this is our joint aim with this group - they will study the ways to make revenue collection more simple, fair, transparent and democratically accountable." President of the European Commission, Jose Manuel Barroso said in a conference held in Strasbourg.

The group will undertake a general review of the current own resources system and issue a first assessment at the end of 2014, taking into account all existing and forthcoming input from the three European institutions and national parliaments.

The group will be chaired by former Italian Prime Minister and EU Commissioner Mario Monti, plus several members appointed by the European Parliament, the European Commission and the Council.

Under the present system, there are three types of own resources. The first is traditional own resources which consists mainly of customs duties on imports from outside the EU and sugar levies. EU Member States keep 20 percent of the amounts as collection costs.

The second type is based on value added tax (VAT), because a uniform rate of 0.3 percent is levied on the harmonized VAT base of each Member States.

The third type is own resources based on Gross National Income (GNI) which is the largest source of revenue of the EU budget. Other sources of revenue include tax and other deductions from EU staff remunerations, bank interest, contributions from non-EU countries to certain programmes, interest on late payments and fines.