Hans Herbert von Arnim

A salary of 9,053 Euros for Members
of the European Parliament?

 

Contents

0.	Summary
1.	The Adequacy of the present regulations
2.	9,053 Euros: dubious standarts of comparison
3.	Tax privileges
4.	The Council is hesitating
5.	Supplementary national tax?
6.	Scandal about the reimbursement of travel costs
7.	Violation of Art. 190.5 of the Treaty
8.	Cumulation of Salaries
9.	Some MEP's will earn three times as much as prime ministers
10.	Immediate taking effect
11.	Appeal to the Council
Appendix:
		Chart
		Resolution on the Statute vor Members (adopted on 17.12.2003)
		Statute for Members (adopted at 3./4.6.2003)

 

Shortly before Christmas, Members of the European Parliament launched a new attempt to set uniform allowances at a high level. The Council’s consent is to be obtained through several concessions, which, when looked at closely, turn out as cosmetics, even as blackmail. The Parliament ultimately asked the Council to state its opinion to these new proposals by 15^th January 2004. But the Council should stay firm and not give in. Otherwise the Statute could become a symbol for European politics taking place far away from the citizens, and pushing through its own interests, regardless of European welfare.*

0.  Summary

0.1   The present distinction between the varying basic allowance being nationally defined (see chart in the appendix) on the one hand, and unvarying reimbursement of costs occurring in Brussels or Strasbourg (3,620 Euros per month general expenditure allowance, 257 Euros per diem allowance, medical assistance, up to 12,305 Euros per month secretarial assistance allowance, furnished and equipped offices) on the other hand, is in line with the European political system, as long as there is no homogeneous entity called ‘the European people’ and as long as a uniform electoral system for the European Parliament does not exist.

0.2   The creation of a uniform basic allowance at a high level (9,053 Euros) and taxation benefits coming from the advantageous Community tax as provided in the planned Statute do not make sense and may entail severe harm to the European idea.

0.3   Linking MPs allowances to the salaries of judges at the European Court of Justice already seems inappropriate for reasons of transparency. Besides, this linkage seems problematic as judges in principle are not allowed to take up another occupation, whereas this restriction does not apply to MPs. They can even be paid as lobbyists. Therefore many European MPs accumulate two incomes. 

0.4   Parliament brought in higher and higher amounts with every draft. An amount of 9,053 Euros currently proposed for the basic allowance of MEPs has not until now been publicly revealed. Instead, incorrect amounts have been mentioned.

0.5   In order to take the edge off the tax issue and in order to facilitate the Council’s consent to the Statute, the European Parliament proposed shortly before Christmas to provide Member States with the possibility to introduce a supplementary tax, in addition to the planned EU-tax. There is, however, no guarantee that, countries like Germany, for example, will actually make use of this possibility after the European election in June 2004. Parliament itself expressed its doubts, whether an additional national tax would be compatible with EU-law.

0.6   The Parliament pledges to rectify prevailing irregularities concerning travel costs to and from Strasbourg or Brussels, but only if the Council consents to the Statute – a case of blackmailing. This misuse should have been remedied long ago. Using it to establish an even greater misuse is completely inacceptable. Furthermore, the proposed reimbursement system threatens to become even more expensive than the present system.

0.7   Any reimbursement of costs incurred by Members at the seat of Parliament is not supposed to be included in the Statute for Members of Parliament, but is supposed to be dealt with by the Parliament’s Bureau, thus apart from any efficient means of control. This seems to be incompatible with Art. 190. 5 of the Treaty establishing the European Community.

0.8   By the Statute, further baseless privileges for MEPs will be created and taking into account other income will be hindered, even if paid out of public funds.

0.9   The Statute would completely mix up the structure of politicians’ salaries in most of the Member States. If they are granted 9,053 Euros, European MPs from Spain, Finland or Ireland will gain more than their cabinet ministers. MEPs from Poland and other accession countries will even earn double or three times the salary of their prime ministers and more than 20 times as much as the average income in their countries. After only one legislative period they would be eligible for old-age pension entitlements which amount up to five times the average income in their country of origin. Citizens will probably not appreciate this. The ten accession countries will be able to opt for the possibility of paying their MEPs less for a transition period. But in reality, this possibility exists on paper only. Every country making use of it will be fiscally punished and will therefore refrain from using it.

0.10  The Statute, originally supposed to enter into force together with the Constitution, i.e. not before 2006, is now supposed to become effective at the beginning of the next legislative period, i.e. directly after the elections to the European Parliament on 13^th June 2004.

0.11  For all these reasons, and to prevent severe damage to the European idea, the Council should use its power of control and should not consent to the Statute.

1.  The adequacy of the present regulations

So far, Members of the European Parliament have received their income from two sources: At home they receive the same allowances as their colleagues in the national parliaments. Members from Germany, for example, receive 7,009 Euros per month – like their counterparts in the German Bundestag. Their English colleagues earn 7,107 (converted) Euros, French Members have a basic allowance of 5,205 Euros (see chart in the appendix).

In addition to their basic allowance, Members have always been highly reimbursed homogeneously for costs related to their mandate in Brussels or Strasbourg: presently they receive from the EU-budget a tax-free expense allowance of 3,620 Euros per month, 257 Euros per diem allowance for subsistence and overnight accommodation (which is also paid on "free Fridays" when the Parliament is not sitting), quite a health insurance for the Members and his/her families in case of illness and up to 12,305 Euros per month for the employment of staff, not to mention their fully equipped offices.

The present regulation which gives Members the same home-salary as their national colleagues is in line with the European Union’s political system. European parliamentarians do not represent a homogeneous entity, ‘the European people’, which as such does not exist. In the European Treaties Members are characterised as “representatives of the peoples of the States brought together in the Community” (Art. 190.1 of the Treaty establishing the European Community). The election of the European Parliament on 13^th June 2004 will in any case not be held according to a uniform electoral system, but according to 25 different electoral laws. Members will be elected – in each of the then 25 Member States separately – according to national candidate lists.

Art. 190.5 of the Treaty consequently does not require a uniform salary for Members of the European Parliament.[1] As electoral law differs in each Member State, it is still appropriate to define the basic allowances of European Members in accordance with the national context; they are, after all, supposed to cover the living expenses of the Members and their families in their country of origin.[2] Thus aligning with existing national standards of income, they also reflect the national assessment of the worth of a parliamentary mandate.

2.  9,053 Euros: dubious standards of comparison

Nevertheless, the European Parliament is aiming at homogeneous standardised salaries, even at a very high level. All Members are supposed to earn an identical monthly allowance of 9,053 Euros (and the correspondingly high uniform old-age pensions).[3] To reach this level, the European Parliament constantly increased the frames of reference for calculating the allowance from draft to draft of the Statute: they started out from the (unweighted) average of all allowances in the 15 Member States (which equalled an allowance of 5,677 Euros)[4], then the weighted average (6,226 Euros),[5] then the average allowance in the four biggest Member States, Germany, France, Italy and Great Britain (7,420 Euros),[6] then the amount of 8,420 Euros[7] and finally half the basic salary of a judge at the Court of Justice of the European Communities (9,053 Euros).[8] The linkage to the salary of judges is already inappropriate, as judges in principle are not allowed to take up a second occupation, while this restriction does not apply to MPs. They are free to continue working and thereby earn an additional income, which in fact many European MPs do. It is even possible for them to be paid as lobbyists. German MEP Elmar Brok (EVP), for example, is in charge of the lobbying-office of the Bertelsmann-Group and receives an estimated additional income of 200,000 Euros per year.[9]

In order to explain the planned increase in allowances, the European Parliament also referred to the high allowances received by Italian MEPs, who earn 10,975 Euros (see chart). However, the Parliament did not mention that Italy – unlike other Member States – has no provision for old-age pensions for its Members of the European Parliament.[10] The level of allowances for active Italian MEPs therefore must be considerably qualified. This is also true for French MEPs who receive a considerably lower old-age pension than their colleagues in the Assemblée Nationale.[11]

European MPs have, by the way, coyly concealed the actual amount of their planned salary, even in the Plenary session of 17^th December 2003. Willy Rothley, MEP and rapporteur on the Statute, even cited an incorrect amount (“about 8,600 Euros”). Since the adjustment of the remuneration with effect from 1.7.2002[12], half the allowance of a judge (and therewith the planned salary for MEPs) equals 8,671 Euros. Since the adjustment of the remuneration of 5.12.2003[13] with effect from 1.7.2003, it equals 8,756 Euros, and due to a further adjustment of the remuneration of 8.12.2003 it equals 9,053 Euros with effect from 1.1.2004[14]. These data had been published some time before 17^th December and ought not to have been kept secret at Rothley’s press conference (where he appeared as an official representative of the Parliament and not as a private person).

3.  Tax privileges

In addition, tax privileges will be provided. The envisaged salary is supposed to be taxed in line with the taxation scheme for European civil servants.[15] This leads to a considerably lower tax burden than in most of the Member States. This planned “tax reduction” for MEPs incited the German “Bild-Zeitung” in autumn 2003 to wage a campaign[16], which produced a strong impact on many German Members of the European Parliament.[17] Their spokesmen felt themselves cornered so that they tried to find refuge in hazardous declarations: the planned Statute would – in reality – not lead to an increase of net income for German MEPs if one considered that they would have to contribute to their old-age pension system. This desired result was then supported by dubious, gross incorrect calculations.[18]

4.  The Council is hesitant

These provisions were already agreed on in June 2003 by the European Parliament, when a Statute for Members was adopted.[19] But the Council, whose agreement is indispensable for the Statute coming into force, is hesitant: not only because of high allowances and the planned advantageous taxation, but presumably also because the salaries and old-age pensions of the Members of the European Parliament in many Member States would then be completely inappropriate. This would most certainly lead to a massive loss of prestige and reputation for the European Parliament, just at the time of the accession of ten new Member States from Central and Eastern Europe (on 1^st May 2004).

5.  Supplementary national tax?

In order to induce the governments eventually to consent to the Statute in the Council, the European Parliament tried shortly before Christmas to take the edge off the tax issue by providing the Member States with the possibility to introduce a supplementary tax, in addition to the planned EU-tax.[20] The Council was ultimately asked to state its opinion by 15^th January 2004.[21] But the Parliament’s proposal contains two snags: first, there is no guarantee that, to quote an example, Germany will actually make use of this possibility once the European election in June 2004 will be over. Moreover, the compatibility of such an additional national tax with primary EU-law has been strongly denied during the plenary session of the European Parliament of 17.12.2003.[22] To what extent these considerations are well-founded can not be explored here.[23] But they will certainly be used as an argument not to make use of the option. So the supplementary national tax will become even less probable.

6.  Scandal about the reimbursement of travel costs

In addition, the Parliament promised the Council to do away with irregularities concerning the reimbursement of travel costs for flights to and from Brussels or Strasbourg. A German MEP from Berlin, for instance, can “legally” rake in up to 28,500 Euros tax-free per year by taking low-fare flights, but claiming normal fares.[24] However, the Parliament is only willing to eliminate this obvious defect if the Council in return consents to the Statute for Members[25] – a case of blackmailing. It is a scandalous fact that these long practised inadequate reimbursement rules have not yet been removed. Using them as a means to establish an even greater inadequacy is the last straw!

Brussels understands this misuse of reimbursement regulations as a legitimate compensation for Members with lower allowances, for example from Spain or Portugal (see chart). But this idea, concocted by those personally concerned, is neither logical nor justified. It is not logical because it cannot explain why also Members with higher allowances, as those from Germany for example, should also benefit from these irregularities. Furthermore, this idea lacks any justification: in Brussels or Strasbourg, European MPs have – in addition to their basic allowance – always been highly reimbursed at a uniform rate for costs related to their mandate (see above number 1).

There is consequently no reason in addition to establish equal basic allowances of deputies at an enhanced level, thus completely messing up the structure of salaries for politicians in most of the Member States. 

Moreover, the proposed reform of the travel cost reimbursement rules will probably prove to be even more expensive for the EU budget than the actual system. So far, it has only been possible to claim the "unrestricted normal fare" – i.e. the highest economy-class tariff[26] – but in future, business-class tariffs would be reimbursed, albeit only after the presentation of receipts.[27] For a flight from Berlin to Brussels, for example, the latter tariff costs about 200 Euros more.[28] 

7.  Violation of Art. 190. 5 of the Treaty

If anything should be set down in a Statute for MEPs, it should be these reimbursement regulations for expenses in Brussels or Strasbourg (expense allowance, subsistence allowance, medical expenses, secreterial assistance allowance). These reimbursements belong to the “regulations and general conditions governing the performance of the duties of its Members” which are to be defined according to the procedure laid down in Art. 190. 5 of the Treaty.[29] But, paradoxically, all these regulations are supposed to be defined by the Bureau of the European Parliament, i.e. without cooperation of the Plenum, the Commission or the Council and without any efficient control[30], even though this is particularly necessary when the Parliament takes decisions on its own behalf.

8.  Cumulation of salaries

The Statute provides the Members with additional privileges, not taking into account income from other sources, even when coming from public funds. According to the Statute, only allowances from current mandates in another parliament will be offset against the future allowance.[31] Old-age pensions, entitlements from service as a civil servent or from functions as cabinet minister will not be taken into account. The former cabinet minister, Jo Leinen, could here be cited by way of example. He had been cabinet minister in Saarland for nine and a half years and has been receiving a high pension for this reason since his 55^th birthday.[32]

In addition, old-age pensions for European MPs will be paid “irrespective of any other pension”.[33] In its former alternative draft, the Council had proposed at least to take into account old-age pensions simultaneously acquired with pensions received by holding a seat in the European Parliament.[34] This proposal was rejected by the European Parliament as a “purely malicious act”.[35] MPs who have a right to pensions from former posts as civil servants or cabinet ministers, can therefore cumulate both entitlements without any restrictions.

9.  Some MEPs will earn three times as much as
prime ministers

Anyhow, the above said does not in any case solve the main problem: if all European MPs equally receive 9,053 Euros per month, Members from Spain, Finland or Ireland, would earn more than their national cabinet ministers. European MPs from Poland, Estonia, Slovakia or Hungary would even earn double or three times as much as their national prime ministers and more than twenty times as much as the average income in their countries. A European MP will acquire a pension-entitlement of 1,584 Euros after one legislative period of five years. This equals the income of five average citizens in most of the Member States (see chart). Their citizens would certainly not appreciate this – just as little as those who would have to provide the funds – for example, German and other tax payers.

The Parliament is trying to crack this nut by providing the ten accession countries with the option of paying their European MPs less for a transition period. But, apart from the fact that this excludes present Member States like Finland, Ireland and Spain, countries opting for this alternative will be fiscally punished: They would have to pay their European representatives out of the national budget,[36] whereas the salaries of all other MEPs are to be paid from the European budget. Making use of this option would therefore be disadvantageous for the accession countries.[37]

10.  Immediate taking effect

The new regulations are supposed to take effect at the beginning of the next legislative period i.e. after the election of the new European Parliament on 13 June 2004. Up to the present, the Statute was to “enter into force at the same time as the Treaty amendments adopted on the basis of the work of the European Convention”[38] – in the year 2006 at the earliest. After the temporary failure of the Intergovernmental Conference of Brussels, the European Parliament wants to give up the linkage to the European Constitution in order to expedite the entry into force of the Statute.[39] The whole matter is therefore of immediate interest. 

11.  Appeal to the Council 

We appeal to the governments of the 15 Member States, including the German national government, to fully fulfil their function as an organ of control and not to consent to the Statute for MEPs, adopted by the Parliament on its own behalf. Failure to do this would severely damage the European idea. The Statute for Members could become a symbol for European politics taking place far away from the gaze of citizens, and pushing through its own interests, regardless of European welfare.