BUDGET: AUSTRIAN LEADER CALLS FOR NEW EU TAXES.

Better financing system needed.

Mr Schussel, who was presenting the priorities of Austrias six-month term as Presidency of the EU to the Parliament, said that the EU needed a obetter system of self-financingo to avoid otensionso between net contributors and net beneficiaries. The size of some countries net contributions to the EUs budget has become an increasingly sensitive political issue over recent years, and most recently came to a head at the summit of EU leaders in December 2005. Germany, Austria, Sweden and the Netherlands all insisted on cutting their net contributions relative to their level of prosperity, while the UK fought to minimise any reduction in its annual rebate which is designed to compensate it for its low level of receipts from the European Unions funds.

The Austrian Chancellor said one of the problems caused by the current system was that the EUs foreign policy chief Javier Solana had to go ocap in hando to get funding for important peace-keeping missions from the member states.

Chancellor Schussel said he expected the European Commission to tackle the issue of own resources when it presented ideas for a review of all spending priorities and sources of revenue in 2008/09.

Current system under fire.

Under the current system of financing, the EUs budget is made up from a share of each member states VAT receipts and income from customs duties and import tariffs (otraditional own resourceso) plus a national contribution based on the size of a countrys economy. However, the UK and the Netherlands contest the way that their contribution is calculated, arguing that receipts from customs duties and import tariffs are not a resource for the EU25 as a whole.

Mr Schussel said that in future 90% of funding for the EU budget should come directly from the member states themselves.

Resistance to new EU taxes.

However, while there is widespread recognition that the current system for raising funds makes getting an agreement between net contributors and net beneficiaries difficult, there is opposition from several member states such as the UK, Ireland and Estonia at creating new EU taxes. These governments argue that countries should retain full control over taxation policy. A Commission initiative planned on a common consolidated corporate tax base (but not affecting tax rates) is expected to fail in the face of opposition from some member states.

Austria comes under fire on free movement of labour.

Chancellor Schussel has faced...