Financing the EU Budget: Moving forward or backwards? CEPS Paperback

Often described as complex, opaque and unfair, the EU budget financing system is an ‘unfinished journey’. One of the most critical issues is that EU revenue, drawn from the cashbox of national taxation, remains intangible to the general public. The nature of the EU as a union of states and their nationals makes the visibility of EU revenue unavoidable. The political sustainability of a move that would put the legitimacy of EU revenue at the forefront of public discussion will depend on the EU institutions and member states’ ability to demonstrate that EU funds can achieve results that are truly beyond member states’ reach. In this, his third, CEPS book on the EU budget, Gabriele Cipriani assesses the current system of financing the EU budget against the criteria of simplicity, transparency, equity and democratic accountability and offers two possible options for reforming the EU revenue system. He finds that the value-added tax (VAT) is a natural choice for funding the EU budget, through a dedicated EU VAT rate as part of the national VAT and designed as such in fiscal receipts, whose use as a means for raising EU citizens’ awareness could be encouraged already in the current arrangements.

Bertrand Competition with an Asymmetric No-discrimination Constraint. Bruges European Economic Research (BEER) 23/June 2012

Regulators and competition authorities often prevent firms with significant market power or dominant firms from practicing price discrimination. The goal of such an asymmetric no- discrimination constraint is to encourage entry and serve consumers’ interests. This constraint prohibits the firm with significant market power to practice both behaviour-based price discrimination within the competitive segment and third-degree price discrimination across the monopolistic and competitive segments. We find that this constraint hinders entry and reduces welfare when the monopolistic segment is small.