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Friday, January 20, 2012

So where does EU money come from?

Ahead of our impending paper looking at the effectiveness or otherwise of the EU’s structural funds (watch this space) we came across this timely comment from Hungarian PM Viktor Orban - who has been subject to some (ehum) controversy over recent weeks (he took a roasting in the European Parliament on Wednesday).

During an interview with German tabloid Bild, he was asked that given Hungary’s economic crisis, with the country trying to obtain a “safety net” from the EU and IMF, was it right that Hungarians enjoyed a 16% tax rate on their income while Germans had to contribute up to 47% of theirs - which is sort of a silly question.

When Orban pointed out that Hungary didn't owe Germany any money, the interviewer asked about the €2 billion Hungary receives from the EU’s structural funds every year. Orban’s answer:
“Correct, but this money does not come from German taxpayers, but from the EU. This money is available to us as a member of the EU.”
Hello Mr Orban. Where does "EU money" come from?

Here at Open Europe we argue that less wealthy member states such as Hungary should continue to receive EU structural and cohesion funds (though the funds need serious reform). But the money doesn't come from the EU’s magic plant, but from taxpayers - and around 1/5 of the EU's budget just so happens to be financed by German ones.

Incidentally, in our forthcoming paper, we'll present a solution that will make both Hungary and Germany fare better from the EU budget.

Just to whet your appetite.


BrandShout said...

We're looking forward for the solution you mentioned in the last paragraph:)

john in cheshire said...

And I don't want any of my money going to the EU to Hungary or to any other foreign country; unless I choose to give some of my money to them.
The UK government, the EU, and every other EU government are thieves. They are stealing money from the pockets of us normal people without our consent and spending it on things that we don't want it spent on.
The sooner the EU crumbles to dust, with the EU apparatchiks underneath the rubble, the better for all of us in Europe. Socialism - the scourge of the 20th. Century carried over into the 21st. Century.

Anonymous said...

"We're looking forward for the solution you mentioned in the last paragraph :)"

So do I. This road to serfdom in this EU has to stop now. One should empower people not to create dependence.

A german Citizen.

Anonymous said...

Probably a good test for the EZ as well.

If they manage to force Hungary into normal behaviour it looks credible that the sanctions in the EuroZone will work. If not, it will be just another waist of time.

Also the time it will take is relevant (it is not exactly the same procedure but rather similar). Getting an EZ country in line, but it would take 3,4,5 years might also indicate that the EZ-rules in practice will not function.