City Research Online

Abstract

NextGenerationEU has been heralded by the EU as a once in a lifetime chance to transform the economies of the Member States. It is a novel legally constructed facility enabling the EU to borrow a significant amount of money on the financial markets. Of course this significant amount of borrowing will have to be repaid. The legal construction places the Member States, and their taxpayers, as the underwriters who will be responsible for repayment unless the EU can raise new own resources. Having first set out the legal structure of NextGenerationEU borrowing and repayment, the article explores the potential revenue raising capacity of the suggested new own resources and the possible timing of their implementation. It will do so by considering both primary and secondary EU legal provisions as well as the Interinstitutional Agreement which contains a roadmap to repay the debt. What will become clear, through a detailed review of the proposals, which are heavily reliant on taxation including estimated figures, is that the EU is a long way off implementing and receiving sufficient revenue through new own resources to repay the debt. The proposal with the most revenue raising potential, the Emmissions Trading Scheme (ETS) is linked to competing EU environmental policies, which means that this could be an ever diminishing resource. The other proposals, being the Carbon Border Adjustment Mechanism (CBAM), a digital levyPillar One of the OECD Inclusive Framework on global corporate tax reform, and a Financial Transaction Tax (FTT), have significant hurdles to their adoption. The article will demonstrate that without considerable recourse to the legal mechanisms of differentiated integration - be that enhanced cooperation or minimum harmonisation – to obviate the issues including those of competence and unanimous voting associated with taxation, the EU stands little chance of repaying the debt through new own resources.

Publication Type:	Article
Additional Information:	This is a pre-copyedited, author-produced version of an article accepted for publication in the European Law Review following peer review. The definitive published version M. Kendrick NextGenerationEU: Will the Debt be Repaid by EU Own Resources or Member State Taxpayers?’, E. L. Rev. (2023) 48(1), 29-61 is available online on Westlaw UK.
Subjects:	J Political Science > JZ International relations K Law > K Law (General)
Departments:	The City Law School > Academic Programmes

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