The European Union's budget is determined by three elements. The Financial Perspective sets out the EU’s spending parameters for a period of seven years. The Own Resources Decision determines the maximum amount and type of income in the EU budget. The third element, the annual budget, remains within the boundaries set by the first two elements. It approves budgetary funds and defines how they are to be allocated to individual areas.
The medium-term political priorities of the European Union are defined in the Financial Perspective, which was introduced at the end of 1980s. The Financial Perspective represents the framework of reference for the annual budget procedures, ensuring controlled spending growth and balanced revenue at the Community level. The Financial Perspective for the period 2007-2013 was adopted in 2006.
The EU budget is financed by three categories of income. Traditional own resources (TOR) mainly consist of customs duties on goods imported from third countries, agricultural duties and sugar levies. The resource based on VAT is a uniform percentage rate that is applied to each Member State’s harmonised VAT revenue. The largest source of revenue (almost 70%) comes from the contributions of member states based on gross national income (GNI). This source is defined as a balancing item, i.e. the difference between expenditure and other sources of revenue.
During its Presidency, Slovenia will strive to ensure that there is a discussion on giving the European Commission and relevant agencies the final discharge for the execution of the annual budget for 2006, while drafting the priorities for the 2009 budget.
On 12 September 2007, the European Commission published the paper Reforming the Budget, Changing Europe, which launches a consultation on the comprehensive review of the budget and its financing. The Commission intends to table its proposal for the reform of the EU budget in late 2008 or early 2009. The consultation process, initiated by the Commission, is to end by 15 April 2008. In May 2008, a political conference will be held where Slovenia is expected to defend the positions of the Council of the EU at the highest political level.
