eurealist.co.uk

BERLIN (Reuters) - The EU should be allowed to levy its own direct tax, for example on international financial transactions, to fund part of its budget, Austrian Chancellor Wolfgang Schuessel told a German newspaper.

Schuessel, who takes over the 25-nation bloc’s rotating presidency at the end of this year, said it could not continue to be the case that “every euro that we need for (the EU) is drawn from national budgets”, according to the interview in Sunday’s weekly Bild am Sonntag.

“We need a fundamental budget reform that provides the EU with its own source of cash,” Schuessel told the paper.

“I suggest there should be an automatic financing mechanism for part of the EU budget — for example through taxation of international financial transactions.”

About half the European Union’s budget, worth 106.3 billion euros in 2005, is paid for by contributions from member states based on their gross national product.

The rest comes mainly from levies on agricultural imports and customs duties and revenue from value-added tax.

EU leaders meeting in Brussels last month failed to agree on the bloc’s 2007-2013 funding and Schuessel said budget talks were becoming “ever more brutal”.

He warned that if the EU was not given its own source of cash, there would be an “unprecedented scrap over distribution”.

Schuessel’s proposal for a tax on international transactions, similar to one made by French President Jacques Chirac to help fight AIDS, would likely meet stiff opposition from financial markets as well as from the United States and other nations, such as Britain, where the financial services sector accounts for a large part of the economy.