Merkel says no to European Union tax ideas

(BRUSSELS) - German Chancellor Angela Merkel came out strongly Tuesday against the creation of a "European tax" to boost direct income for the European Union.

"I am against the introduction of a European tax," Merkel said after talks with Belgian caretaker premier Yves Leterme, whose country chairs the EU until the end of the year.

The European Commission, faced with governments that want to reduce their EU costs at a time of domestic cuts and political pressure on spending priorities, has suggested a European tax.

This comes as the EU debates the shape of its revenues and expenses from 2014 to 2020.

Currently, three quarters of EU funding comes from national governments, although a VAT or sales tax element offers a putative, if indirect, EU tax on citizens.

This is separate from the heated row over the percentage increase in the 2011 budget, which emerged as a hot political issue at last week's EU summit.

Other ideas include transferring part of a state's tax income directly to the EU or taxing financial transactions or energy.

France and Britain are already firmly against an EU tax, although Spain has said it is open to the concept.

The European parliament is firmly in favour.