Saturday 14. December 2019
#169 - March 2014

 

The European Parliament’s budgetary prerogatives

 

The European Parliament plays a full part in annual voting on the European budget, in drafting multiannual financial plans and in exercising budgetary control.


Even though it has the highest democratic legitimacy, even though it has an important role to play in the legislative procedure, that still does not stop a parliament which does not wield overall control of the budgetary process from being always seen as the junior partner. The European Parliament has only managed to shrug off this inferiority status since the Treaty of Lisbon came into force. Having said that, what it still lacks is the power to levy taxes, but that is quite another matter. That would send a signal that the European Union had changed its character and become a federation of Member States.

 

On 1 January 2009 the Treaty on the Functioning of the European Union (TFEU) came into force. This, together with the Treaty on European Union (TEU), forms the body and the legal basis of the Union. From that date, TFEU Article 314 governs the EU’s budgetary process and fixes the dates and deadlines to be respected among the European institutions. It also sets down the prerogatives of the European Parliament for the Parliamentary vote. However, according to the procedure set down in Article 314, the European Commission is required to submit its draft budget for the following year not later than 1 September to both the Parliament and the Council. In reality, a ‘pragmatic’ timetable was followed, so that this had already happened last April. According to the same timetable, the Council decides its position before the end of July, and that is the moment when the Parliament officially swings into action to decide its position on the draft budget. The time available for this is forty two days. If the Parliament decides to endorse the Council’s decision (or abstains from deciding on any position), then the budget is deemed to be finally approved.

 

What usually happens is that the Parliament approves amendments to the initial draft – and this prompts the convening of a conciliation committee composed of an equal number of representatives of Council and Parliament. At the instigation of the Commission, this special committee has to find a compromise that will be acceptable to a qualified majority of Member States meeting in Council and a simple majority of Parliamentary representatives. Hence, last November the committee reached agreement on a European budget for 2014 at the level of €135.5 billion in payment appropriations, a sum that was slightly higher than that approved by the Council, which had proposed a figure of €135.1 billion but still one billion less than the Commission’s figure. With a spending cut of almost 6% of the 2013 budget, the Parliament therefore had to accept a lower budget; even so, on the Council side several Member States voted against this agreement. As often happens, the art of compromise is the art in which the European institutions demonstrate perhaps the greatest prowess.

 

The compromise of 12 November 2013 was all the more important because it created a breach enabling the European Parliament to agree to the Multiannual Financial Framework (MFF) that fixes the ceiling below which the annual budget spending must remain. But, without the majority agreement of the Members of the European Parliament in the aftermath of this compromise, the Council (itself bound by the rule of unanimity) would not have been able to approve the MFF for the different budget headings and for the period 2014–2020.

 

As a condition for its agreement to the MFF, the Parliament also got the Council to set up a high-level group on the EU’s ‘own resources’. Chaired by Mario Monti, appointed at the end of January, this group is charged with studying how to reform the way in which the revenues of the European budget are determined. At present, the Council is the sole decision-making authority – on the basis of unanimity – concerning this part of the budget, while the Parliament may only submit an opinion. These days, it seems hardly likely that this high-level group will somehow manage to convince the representatives of the Member States – and especially the national parliaments – of the justification for the introduction of a European tax. A solution whereby the control of this tax at European level – no matter what its fiscal base (company profits, energy, financial transactions) – would be put into the hands of European parliamentarians seems even more improbable.

 

The European Parliament, which does also wield some political power in budgetary monitoring, today plays a full part in the voting on European budget expenditure, the upper limit of which, however, is still set by the MFF. By contrast, the Parliament’s influence on determining the quantity and quality of budgeted revenues is extremely limited. If that is changed, it would mean that the European Union had become a federation.

 

 

Stefan Lunte

COMECE

 

Translated from the original text in French

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