Luxembourg PM warns new EU taxes could “kill” economic growth

Luxembourg Prime Minister Luc Frieden has warned that proposals to create new EU-wide tax revenues could “kill” Europe’s already weak economic growth.

Frieden gave an interview to Euractiv ahead of an EU summit debate in Cyprus on April 24 on the next Multiannual Financial Framework (MFF). The PM said the bloc must strike a “balance” between financing new priorities such as defence and avoiding growth-slowing EU-wide taxes, often referred to as “new own resources.”

“We need to make sure that we do not kill our growth, which is not very strong, but it’s there,” said Frieden, a member of the same European People's Party as European Commission President Ursula von der Leyen.

“We don’t kill it by tax decisions or own resources that would kill the small growth that we have,” he stressed.

The European Commission has proposed new bloc-wide taxes on electronic goods, tobacco, and large corporations as part of the post-2027 MFF. But the plans have faced strong criticism from several EU member states, many of which are reluctant to expand the bloc’s €1.8 trillion shared budget while national finances remain under pressure.

Meanwhile, European Parliament President Roberta Metsola said she would encourage leaders “to look with fresh eyes at own resources,” particularly to help service and repay the EU’s joint borrowing.

“We need new money to service old debt and that is something that we will ask the member states to look at,” the Maltese politician said upon arriving in Nicosia for the summit.

Opposition from national governments to the proposed taxes comes as European Council President António Costa pushes to finalize MFF negotiations before the end of 2026. The Commission has argued that the new revenue sources are also essential to help repay the EU’s pandemic recovery fund.

Frieden, however, downplayed the urgency of the negotiations, saying the bloc still had “ample time” to reach an agreement.

“I’m convinced that by the end of the year or so, we will find common ground,” he said.

By Nazrin Sadigova