Spending needs for the EU budget for 2028–2034 have grown, and nowhere more so than in the investment required for the social and ecological transformation. At the same time, it is important to move beyond the problematic debate about higher national contributions to the EU budget, since those contributions are financed largely through taxes on labour and consumption. We have analysed how new EU revenue sources — among them taxes on ultra-high wealth and on crypto transactions — could help to do exactly that.

Political negotiations on the EU budget for the years 2028–2034 are entering a critical phase. The European Commission has presented a concrete proposal for a larger EU budget. Under it, the budget for the 2028–2034 period would amount to almost €2 trillion, or around 1.26 per cent of the EU’s gross national income (GNI), compared with approximately 1.1 per cent under the current financial framework.

The larger budget is intended to address growing public spending requirements related to climate action and digitalisation, public security and competitiveness, while also meeting the repayment obligations arising from the Covid-19 recovery fund.

The EU budget is currently financed predominantly through contributions from the member states, calculated on the basis of GNI and raised, in turn, mainly through taxes on labour and consumption. They are supplemented by revenue from value-added tax and customs duties.

This financing architecture has long been criticised, because it frequently narrows political debate to national net positions. Attention then fixes on how much each member state contributes and how much EU funding it receives in return. Such a perspective makes it more difficult to view the EU budget as an instrument for financing common European tasks, and it thereby limits the political scope for collective action at the European level.

Expanding genuine EU own resources — that is, revenue that does not come directly from national budget contributions but rests on common European levies or cross-border tax bases and is permanently assigned to the EU budget — could partly break with this logic. On the one hand, the Commission’s proposal for the 2028–2034 EU budget includes channelling 30 per cent of the revenue from the Emissions Trading System (ETS) and three-quarters of future revenue from the Carbon Border Adjustment Mechanism (CBAM) into the EU budget. On the other hand, it includes a levy on uncollected electronic waste, a European tobacco tax and a new corporate contribution. Together with adjustments to existing own resources — such as reducing the share of customs revenue retained by member states and increasing the plastic levy — these measures are intended to generate an additional €58.2 billion in annual revenue.

The plans presented by the European Commission have, however, already encountered reservations in several member states. It therefore makes sense to consider options that go beyond the Commission’s current proposals.

Untapped revenue potential

Our study assesses both the own resources proposed by the European Commission and a range of alternative options, evaluating them according to criteria that include their European dimension, their distributional effects, their suitability for addressing environmental and societal externalities, and their revenue potential.

The results show that various alternative instruments — among them a financial transaction tax, an EU-level digital tax, taxes on cryptocurrency transactions and online gambling, aviation-related levies, and taxes on very wealthy individuals — could generate revenue while simultaneously addressing challenges such as tax avoidance, financial-market instability, climate change and rising inequality.

The sums involved vary widely. At the modest end sit annual revenues of around €2 billion from taxing online gambling and €3 billion from levies on cryptocurrency transactions. Aviation-related taxes occupy the middle ground, at between €5 billion and €7 billion a year. At the top end, taxing ultra-wealthy individuals could raise as much as €41 billion annually.

Where only Europe can act

A financial transaction tax would not only generate additional revenue for the EU budget; it would also make short-term and speculative trading in financial markets more expensive. It could therefore help to curb certain forms of destabilising financial-market activity. Since financial transactions frequently take place across borders, and market participants can relocate relatively easily, there is a strong case for a coordinated European solution rather than fragmented national approaches. Previous proposals for a European financial transaction tax envisaged, for example, low tax rates on transactions involving shares, bonds and derivatives.

An aviation-related levy is another natural candidate for a new EU own resource. Aviation benefits from preferential tax treatment compared with other transport sectors, including exemptions from value-added tax and the limited inclusion of international flights in carbon pricing. A levy linked to the carbon dioxide emissions generated by flights could therefore reflect environmental externalities more accurately in ticket prices while simultaneously generating revenue for European priorities. Since emissions from international flights cannot meaningfully be attributed to a single member state, and national ticket taxes can partly be circumvented by flying from airports in neighbouring countries, an EU-wide solution would be best.

The taxation of crypto-assets could also be considered as a new source of revenue for the EU budget. Here the European Commission is discussing in particular a tax on crypto transactions or, alternatively, a tax on capital gains from crypto-assets. Two caveats must be taken into account: the tax base for crypto-assets fluctuates, and activities could relatively easily be relocated to jurisdictions outside the EU. This is precisely why a coordinated European solution would be preferable to a patchwork of separate national measures.

A tax on ultra-high wealth would have particularly high revenue potential. One possible approach would be a minimum tax for individuals with net wealth exceeding €100 million, ensuring that the taxes paid annually by this group amount to at least a specified proportion of their wealth. Such a tax would specifically target individuals whose effective tax burden is lower than that of other groups. At the same time, it could help to limit tax competition between member states for particularly wealthy residents.

Increasing the EU budget’s dependence on GNI-based national contributions, which rely heavily on taxes on labour income and consumption, risks undermining public support. A more developed system of genuine EU own resources could help to reorient the debate away from higher national contributions and towards the financing of European public goods and common political priorities. An agreement on additional own resources is essential if the proposed expansion of the EU budget is to be financially and politically sustainable.

Taxes on particularly mobile tax bases appear especially suitable for implementation at the EU level, since national approaches are often less effective in the face of tax competition and cross-border mobility. Some proposals — such as taxes on ultra-high wealth or on crypto-asset transactions — are particularly attractive because they currently do not exist at the national level and could therefore strengthen EU revenue without reducing any existing national tax revenue.

A better mix of own resources could strengthen the EU budget while distributing its financing more evenly across different parts of the economy, including between businesses and households.