Britain risks fines unless it pays EU tax bill

Published Mon, Oct 27, 2014 · 01:03 PM

[BRUSSELS] Britain must contribute an extra US$2.66 billion to the EU budget or face fines, the European Commission said on Monday, after a furious Britain's Prime Minister David Cameron insisted that London would not pay.

"There will be a moment when the Commission will start imposing ... fines on the amounts that are due," interim EU Budget Commissioner Jacek Dominik said when asked what would happen if the British premier stuck to his guns and did not pay by a Dec 1 deadline.

Mr Cameron had called the demand completely "unacceptable" at a European Union leaders summit on Friday, claiming he had been bushwacked out of the blue.

"I am not paying that bill on the first of December. If people think that is going to happen they've got another thing coming," he said.

"We are not suddenly going to take out our chequebook and write a cheque for two billion euros, it is not happening."

Mr Dominik reiterated that Britain should not have been surprised since the process of adjusting the budget was well established and, as normal, included British-sourced figures and involved British officials who had not raised any problems on the issue after official notification on October 17.

"I was surprised by (Cameron's) reaction," he said, "because there was no signal that they had a problem with this figure." Asked if there could be a political solution with the British premier, Mr Dominik said he did not think so.

Calculating the budget was based on a formula agreed by all EU member states which would require new legislation to change.

Going down that track would be to "open up a Pandora's box," he said.

At the same time, he said, Britain could not pick and choose which bits of EU laws it wanted to live by.

On top of its regular annual budget rebate, London was due to get an additional 500 million euros(S$808.9 million) next year, Mr Dominik said.

Britain "cannot question one day the system that imposes (an extra payment) and next day say it likes the other element" which gives it a rebate, he said.

Mr Cameron, facing a rising tide of eurosceptic voters deserting his Conservative Party has promised an in-out EU referendum in 2017 if he wins elections next year, making the latest exchanges with Brussels even more bitter.

The EU budget, currently running at around 135 billion euros per year, is based on the principle that the bigger the member state is, the more it contributes.

Accordingly, Germany pays most, followed by France and Italy along with Britain, which also gets a special rebate won by late prime minister Margaret Thatcher in 1984.

To ensure that the fraught budget process is fair and transparent, each year the EU reviews the economic performance of all 28 member states, adjusting their contributions up or down as a result.

In addition, in recent years, authorities broadened the review to include new forms of economic activity, some of them illegal such as prostitution and drug dealing.

The result for 2013, the year in question, was a much larger than usual range of adjustments - as well as Britain, the Netherlands has to pay an extra 650 million euros.

Especially galling for London is that France, with an economy which has stalled, will get a rebate of some one billion euros while powerhouse Germany gets 780 million euros.



BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to



Get the latest coverage and full access to all BT premium content.


Browse corporate subscription here