1
ANNEX A
The Community's direct income system
1. During the period up to 1970, the Community's expenditure was financed by a combination of the proceeds from levies on agricultural imports which were made over to the Community, and financial contributions from the member states. The Treaty of Rome establishing the European Economic Community envisaged the replacement, in due course, of the national contributions by the Community's own resources
<<
•
2. On 21 April 1970, following agreements reached at the Summit meeting of the Six at The Hague in December 1969, and the submission of proposals by the Commission, the Community's Council of Ministers adopted a new system designed to make the Community self-financing and to bring its expenditure into one central budget.
3. Under the new system, which came into effect on 1 January 1971, the Community will progressively draw a greater proportion of finance for its budget directly from the revenue of customs duties and of levies on agricultural imports. Except for a 10 per cent rebate to cover collection costs, all levies on agricultural imports will be handed over by member states to the Community; in the case of customs duties, an increasing proportion will be paid over until, from 1 January 1975, all customs duties will be handed over, less the 10 per cent rebate. The remaining proportion of the necessary revenue will continue to be made up until 1975 by contributions from member states according to this agreed fixed scale:
Belgium France
...
Germany Italy Luxembourg Netherlands
•
Per cent
6.8
32.6
32.9
20.2
0.2
7.3
The contributions from these countries in an enlarged Community would, of course, be different.
4. From 1 January 1975, in addition to the revenue from levies and customs duties, the Community is due to receive directly a proportion (equivalent to up to a 1 per cent rate) of the proceeds of a Value Added Tax, which by this time will be in force in all member states, to the extent necessary to meet any deficiency.
99
5. All these financing arrangements are subject, until 1978, to what are called "correctives", which will ensure that no country's share of the budget will increase or decline by more than a relatively small amount from the so-called "key level fixed for 1970. From 1971 to 1974, no country's budget share may rise by more than 1 per cent or fall by more than 1 per cent of its share in the previous year. For the years 1975 until 1977 these annual limits will be 2 per cent of the previous year's share in either direction. Thus Italy, whose 1970 key was 21.5 per cent, would have a maximum contribution of about 23.75 per cent in 1977.
41