An EU Future Fund: key building blocks and options This is not easily transferable to other Member States, how­ever, as taxes remain a national competence. Having said that, it is worth looking at the extent to which European tax credits or deductions could be introduced on the existing le­gal basis using the Single Market competence(see Factsheet EU Parliament), at least for cross-border investments, which would then be implemented by the Member States via their national tax systems but reimbursed by the EU. National in­struments for combating the inflation crisis via taxation or competition policy(Weber 2023; Kolesnichenko 2023; Jung and Hayes 2023) developed in recent years, which also con­tribute to promoting a fair transformation, could thus, un­der certain circumstances, be coordinated and counterfi­nanced at European level from the outset. In the case of some EU funds, direct payments to com­panies are already possible and can serve as models. The EU Innovation Fund, for example, which among other things pursues the aim of promoting innovative technologies for carbon capture, utilisation and storage, for the generation of renewable energy and for the storage of energy, is aimed directly at companies. In addition, the Connecting Europe Fa­cility, for example, awards direct project funding to compa­nies in certain areas of energy and infrastructure. 3 The EU Fu­ture Fund could build on these examples, at least in part – ideally in conjunction with a less bureaucratic procedure without project applications, under which companies could instead make investment decisions and have part of the costs reimbursed directly by the EU afterwards, based on clear cri­teria(for example, in the form of a credit against national tax obligations, as with the US Inflation Reduction Act). 4.3  AND LEGAL BASIS In principle, three different sources are conceivable for fi­nancing the EU Future Fund, also in mixed form: Member State contributions, EU own resources and EU bonds. Be­cause, on political and economic grounds, increasing Mem­ber State contributions is rather improbable – given that the pressure on national budgets will undoubtedly increase in the next few years and further growing expenditure items, such as defence, will be added –new EU own re­sources must urgently be pursued in a future-proof man­ner in the negotiations on the next Multiannual Financial Framework. Otherwise, there is a risk of massive cuts in the EU budget for the next funding period in the face of in­creasing investmentneeds. The worry remains, however, that new EU own re­sources will first and foremost be used largely to re­pay existing credit costs for the Recovery Fund. To be 3 In contrast, the Important Projects of Common European Interest(IP­CEIs), under which cross-border consortia can apply for project fund­ing in areas such as the European hydrogen or battery industry, are fi­nanced from Member State budgets and organised by them together with the participating companies, requiring only approval by the EU Commission. They are therefore an example of national funding policy with at least partial European coordination under today’s more flexible state aid framework. sure, it’s important to ensure reliable repayment of the Next­GenerationEU recovery fund. From 2028 at the latest, the new interest rate environment will result in at least 20 billion euros in annual costs until 2058(Lindner et al. 2024). According to the European Commission’s proposal of June 2023, part of the annual revenue from the ETS2 system(cur­rently approximately 7 billion euros, and from 2028 around 19 billion euros), from CBAM(approximately 1.5 billion eu­ros) and a share of increased corporate taxes from the mini­mum tax(BEFIT)(approximately 16 billion euros) are ear­marked for repayment. In the event of higher interest costs, the proportion of this revenue that becomes EU own re­sources could be increased accordingly. However, the pro­posals still have to be taken up by the Member States and adopted(via reform of the own resources decision, which requires unanimity and ratification). Any new own resources for additional investments that go beyond this should be used to improve distrib­utive justice in the EU and designed in such a way that they are not introduced at the expense of federal, state and municipal budgets. In light of this, the introduc­tion of an EU-wide financial transaction tax would represent a useful new source of EU own resources. A one-off wealth levy, similar to the former wealth levy in Germany(the so­called”Lastenausgleichsabgabe”) could also be a useful ad­ditional source of funding for the transformation. Other promising forms of own resources might lie in corporate tax­ation, for example in the taxation of economically counter­productive share buybacks. Another option would be sys­tematic taxation of excess profits in the Single Market. In the wake of the Covid-19 pandemic the EU Member States were able to agree on a temporary excess profit tax on energy companies. An excess profit tax could be permanent or tem­porary as a supplement to corporation tax in order to sup­port incomes during negative economic shocks(Hebous/Pri­hardini/Vernon 2022) and on its own could bring in an esti­mated 100 billion euros a year(Trautvetter 2024). It would have to be designed in such a way that it did not curtail com­panies’ investment Another option would be levies on, for example, energy-intensive cryptocurrency or environmental­ly harmful biowaste(Schratzenstaller et al. 2022). Another idea would be a minimum climate solidarity surcharge(‘ Kli­masoli ’) in order to tax particularly energy-intensive luxury consumption, such as private jets and yachts(Rehm, Huwe and Bohnenberger 2023). 4 If equity investments were also financed via the EU Future Fund, the return on public equity investments could be used as a further source of income for repay­ment. In contrast to direct subsidies equity investments could be not just an instrument of disbursement but rather a useful component in the funding of an EU Future Fund. To 4 A minimum wealth tax, on the other hand, which according to Kapel­ler et al(2023) could go a long way towards closing the investment gaps, would, under the German Constitution(Basic Law), be the re­sponsibility of the federal states. From a trade union perspective(EGB 2023) a European initiative to coordinate minimum rates of wealth taxation would be advisable, although the Member States should de­cide how the funds are used. 17