As even a relatively modest proposal to increase the EU’s long-term budget has already sparked fierce resistance, Brussels is anxiously looking to bring in new resources. European Commission has proposed to incorporate five new “own resources” into the next Multiannual Financial Framework 2028-2034.
EU’s financial needs are mounting as the Union is obliged to repay its post-pandemic recovery plan, NextGenerationEU. The so-called own resources are EU-specific revenue streams designed to reduce reliance on member state contributions and boost financial autonomy. They span from Emissions Trading System and tobacco tax to e-waste contribution.
1. Emissions Trading System
The Commission wants to channel part of the revenue from the expanded EU Emissions Trading System (ETS) into the EU budget. The ETS, which forces companies to pay for carbon emissions, is being gradually broadened. ETS2, covering road transport and buildings, is set to begin operating in 2027.
This resource is one of the least contested. Experts argue that ETS revenues qualify as genuine EU own resources. Carbon emissions are cross-border externalities, and the ETS, like customs duties, is regulated at the EU level. The expected revenue is €9.6bn per year.
That said, the burden may fall unevenly. Eastern European countries rely more heavily on fossil fuels and may end up contributing more, effectively transferring funds westward.
You might be interested
2. Carbon Border Adjustment Mechanism
The Carbon Border Adjustment Mechanism (CBAM) entails a carbon charge on imports such as steel, cement, and fertilizers, ensuring that foreign producers face the same carbon costs as EU firms. Officially framed as a levy rather than a tax, CBAM entered into force in October 2023 and will become fully operational in 2026.
Its role as a budget resource may be modest, but politically, it fits the mold of an EU-level levy. Like customs duties, it is collected at the EU’s external borders. The expected revenue is €1.4bn annually.
Internally, CBAM has been relatively uncontroversial and is welcomed as a fair measure for EU businesses. But externally, backlash is growing. The BRICS nations have condemned CBAM, arguing it undermines the development of emerging economies under the guise of climate action. As such, it is likely to remain a sticking point, for example, in ongoing EU trade talks with India.
3. Big business tax
The Corporate Resource for Europe (CORE) is the most politically sensitive of the new proposals. It would impose a fixed annual charge on companies operating in the EU with turnover above €100m. Starting €100,000 for companies with a revenue of €100m–€249.9m, €250,000 for companies with a revenue of €250m–€499.9m, €500,000 for companies with a revenue of €500m–€749.9m, and €750,000 for companies with a revenue of €750m and more.
Because the top bracket is open-ended, large corporations would pay an insignificant share of their turnover (e.g., 0.008% for a €10bn company). On the contrary, smaller firms near the threshold would face a relatively higher burden. The total expected revenue is €6.8bn annually.
There is no question for the European Union taxing companies, as the EU has no legal basis for this. – Friedrich Merz, German Chancellor
Critics argue this distorts EU competitiveness, right at the moment where that’s one of the EU’s core priorities. Germany and the Netherlands have flatly rejected the idea, stressing that the EU lacks the legal authority to tax companies directly.
“There is no question for the European Union taxing companies, as the EU has no legal basis for this,” said German Chancellor Friedrich Merz recently. “We are not doing that.”
However, it is worth noting that it is not technically the EU taxing companies, but member states would collect the levy and transfer it to the EU budget. Whether this workaround will convince opponents remains uncertain. Traditionally less frugal countries in Southern Europe are also not enthusiastic, while BusinessEurope, the continent’s main business lobby has called the levy “totally counterproductive,” warning it would further erode the EU’s investment climate.
The European Parliament’s S&D group, by contrast, expressed support for the levy, calling it a step toward fair taxation. “Our long-standing and persistent calls for fair taxation have finally been heard by the European Commission. We believe big corporations have to pay fair taxes and contribute to the European budget as part of a system of new and genuine own resources,” stated the group.
4. Tobacco tax
The Commission also proposes a 15% uniform levy on the minimum excise duties already applied to tobacco products across the EU. This would turn an existing national revenue stream into an EU-level one. Commission frames this move as both a health and fiscal policy tool.
Resistance has been immediate. Sweden’s Finance Minister Elisabeth Svantesson called the idea “completely unacceptable,” arguing that tax revenues should benefit national budgets, not EU institutions. Italy and Greece echoed the same line. The expected revenue is €11.2bn.
“Let’s defend the fiscal sovereignty of states and say NO to this EU-led theft,” said MEP Isabella Tovaglieri (Patriots/ITA).
Others disagreed. MEP Danuše Nerudová (EPP/CZE) welcomed the proposal: “I do support the excise duties on tobacco. New forms of harmful tobacco products appear on the market and often are not properly taxed. This must stop.”
The idea of increasing levies on tobacco is not entirely controversial. In March 2025 health ministers wrote to EU Health Commissioner Olivér Várhelyi calling for stronger EU action against tobacco and novel nicotine products. However, this money going to Brussels rather than to national authorities will remain a point of contestation.
5. E-waste contribution
Finally, the Commission proposes a levy based on the amount of electronic waste generated by each member state. This is meant to promote recycling and reduce environmental harm, while also adding a new revenue stream.
This proposal has faced relatively little political opposition. Yet its long-term stability is in doubt. Like the 2021 “plastics own resource,” which taxed non-recycled plastic packaging waste, its revenue base could shrink over time as environmental behavior improves. The expected revenue is €15bn.
“We don’t seem to learn from our mistakes,” Renew Europe, centrist political group of the European parliament, noted. “As with the plastic tax, this e-waste levy is likely too small and too unstable to fund a serious share of the EU budget,” stated the group.
The bigger picture
The new own resources package will require a careful balancing act to fund growing EU ambitions without alienating member states.
Some proposals, such as ETS and CBAM, may pass more easily. MEP Nerudová told EUperspectives she believes “the Council will easily agree on that.” Other own resources proposals, particularly CORE and the tobacco levy, face strong headwinds. Critics view them as infringing on national fiscal sovereignty. Supporters, including Renew Europe, argue they are necessary to avoid budget cuts.
“If we don’t find new own resources, there will be only one option: cuts,” warned Renew’s Fabienne Keller (FRA), the group’s lead negotiator on the long-term EU budget. “Budgets don’t lie: either you find resources or you slash spending. But something’s gotta give,” she said.
