§ Baroness WOOTTON of ABINGERasked Her Majesty's Government:
On what basis the contributions payable to the EEC by its various Members are calculated.
§ The MINISTER of STATE, TREASURY (Lord Cockfield)In accordance with the provisions of the Communities' Own Resources Decision of 21st April 1970, as implemented by Regulations 2891/77 and 2892/77, the Community budget is to be financed predominantly by the customs duties and agricultural levies collected by Member States and a notional VAT at a rate of up to 1 per cent. levied on a Community harmonised base. These arrangements are expected to apply in full, for the first time, to the 1980 budget, when the period of adjustment from the previous system should have been completed by all Member States.
Under Article 199 of the Treaty of Rome, revenue and expenditure in the budget must be in balance. Initially, provision is made for this on the basis of forecasts by the Commission of the revenue from levies and duties and of the value of Member States' shares of the harmonised VAT base in such a way that 1354WA the uniform VAT rate declared is sufficient to finance the balance of the budget not covered by anticipated levies, duties and miscellaneous revenue.
Thus the calculation of a Member State's contribution is in the first place an estimate comprising expected customs duties and agricultural levies, and the particular Member State's forecast pro rata share of the estimated amount of VAT required to balance the budget. These forecasts of Member States' contributions, however, have only a temporary relevance to the amounts which they actually contribute. This is because, each month, Member States are obliged to pay over the levies and duties which they actually" established "—that is, collected two months previously—regardless of how this relates to previous expectations. Their monthly VAT contributions are, on the other hand, initially one-twelfth of the total amount originally calculated as due from them on the basis described above. Any errors in forecasting the VAT base are, however, eventually removed by retrospective adjust-merits to Member States' VAT contributions to reflect the application of the last declared uniform VAT rate to the actual value of each Member State's share of the harmonised base in the year in question.