Jan Strupczewski & Kate Abnett

BRUSSELS, (Reuters) – The European Commission has proposed three new taxes for the 27-nation bloc. These would provide cash over the next decades to pay the combined borrowing by all EU countries towards the 800 billion Euro recovery fund.

Under a new carbon marketplace, the first will levy CO2 emissions from cars and fuels. It also uses existing EU carbon trading systems to place CO2 costs on vessels and raise existing payments for airline passengers.

According to the Commission’s proposal, 25% of the CO2 revenues currently paid to governments would be directed to the EU budget in the future, providing an average 12 billion euro per year from 2026 to 2030.

Second, imports from countries that have lower CO2 emission standards would be subject to tax to make the CO2 emissions cost equal to the price manufacturers would pay if the goods were made within the EU.

The Commission suggested that the EU budget should receive three-quarters of the border levy (called the carbon boundary adjustment mechanism (CBAM)). This will provide around 1 million euros annually over 2026-2030.

Under the G20 and OECD recent agreements regarding re-allocations of taxing rights, the third tax would provide the EU with a 15% portion of the remaining profits from multinational large companies.

When the agreement is reached, these revenues could reach between 2.5 billion to 4 billion euro per year for the EU budget.

To repay unprecedented EU borrowings for 800 billion euro recovery funds, which are due to be returned by 2058, the EU budget will need additional revenues.

With the European Parliament, EU government groups grouped within the EU Council, negotiations will begin on the Commission’s proposal. A second set of taxes is also proposed by the Commission to repay the Recovery Borrowings before the end of 2023.

Already, countries are arguing over these plans. Some states are concerned about the negative social consequences of the proposed carbon market, which would be used to charge fuel suppliers for CO2 emissions from cars and heating homes.

Anna Moskwa from Poland, climate minister said Monday that the proposal was not acceptable and would create an increased burden for vulnerable citizens. This statement came at a meeting with EU ministers.

Commission stated that part of the EU’s new levies could be set up a fund to protect low-income households. It would include subventions for home renovations and energy bills.