EU: Von der Leyen calls for new EU taxes on big firms in €2tn budget proposal

The European Commission president, Ursula von der Leyen, has called for new EU taxes on large companies, tobacco and electronic waste as part of a proposed €2tn (£1.7tn) budget.

Announcing the planned EU budget for 2028 to 2034, she effectively fired the starting gun on a major and complex political fight to define the EU’s future.

“It is a €2tn budget for a new era … that confronts Europe’s challenges, that strengthens our independence,” she told reporters at a news conference that had been delayed by several hours after her officials worked into the night haggling over numbers.

She said the proposals would increase EU funds for defence fivefold, triple funds for migration and border management and double the research budget with 35% ringfenced for climate and biodiversity.

There is also a €100bn fund for Ukraine, described by the EU budget commissioner Piotr Serafin as “our most strategic partner”.

Green politicians and NGOs reacted with anger as it appeared that the EU’s only dedicated nature protection fund was being scrapped as part of an effort to simplify the budget by drastically reducing the number of programmes.

Rasmus Nordqvist, a Danish Green MEP, said it was “irresponsible and short-sighted” to leave out dedicated finding for nature, and that the crisis in biodiversity would only deepen without action.

There was also criticism from farmers and the European parliament about a plan to merge emblematic EU policies, including the common agricultural policy and regional funds into one pot with fewer ringfenced programmes.

The Copa-Cogeca farming group, which mounted a small but noisy demonstration outside the commission’s headquarters, said “the very foundation of European agricultural policy is being undermined and dismantled in what could go down as a black Wednesday in Brussels”.

EU officials rejected the characterisation and said direct payments to farmers worth €300bn would be protected.

In a sign of more bitter disputes to come, Hungary’s prime minister, Viktor Orbán – who nearly torpedoed the last EU budget – revealed his characteristic opposition to support for Kyiv. “Brussels must not abandon Europe’s farmers to bankroll Ukraine,” he said.

Von der Leyen said her budget would mean cash-strapped national governments would not have to pay more as she set out plans for five new EU revenue raising schemes.

She wants to raise revenues from the European emissions trading scheme, Europe’s carbon border adjustment levy, taxes on companies with a turnover greater than €100m and duties on tobacco and electronic waste. The EU is already partly funded by income from customs duties.

Countries that pay more into the EU than they receive in return immediately voiced alarm. The Dutch finance minister, Eelco Heinen, said the proposed budget was too high, and Sweden said: “We won’t solve the EU’s problems with a bigger budget.”

Germany has insisted the budget should not be higher, and France is grappling with a domestic budget squeeze that could destabilise the government.

In contrast, a cross-party group of MEPs representing centre-right, socialists, liberals and greens said the plans did not “leave sufficient funds for critical priorities including competitiveness, cohesion, agriculture, defence, climate adaptation” and other economic spending.

Adding to the complexity, from 2028 the EU must start repaying loans taken out under the €750bn pandemic recovery fund. The commission has previously estimated €25bn to €30bn a year is needed for debt repayment, equivalent to double the current research budget.

The current seven-year budget, excluding the pandemic fund, is worth €1.2tn, roughly 1% of the size of the European economy.

The budget must be approved unanimously by the 27 member states and the European parliament.