Without any tax sovereignty of its own and faced with a substantial decline in the volume of "traditional own resources" (customs duties, agricultural levies, sugar levies), the European Union is left with a very low level of revenue autonomy. The EU budget is financed primarily from national contributions by the member states. Hence, controversies are more and more likely to arise over the EU budget and, in the long run, the Union is at risk of being underfinanced. Moreover, there is a growing contradiction between the absence of EU tax sovereignty, on the one hand, and the intensified pace of European integration, on the other hand. Despite the associated increase of cross-border externalities (mainly environmental damage), no recourse is being taken to taxation at the European level as a steering instrument. Another point worth noting in this context is that EU funds are used to finance a range of "European public goods" and activities with positive cross-border externalities. This holds, in particular, for expenditure for research, education and the transport infrastructure, which is subject to decisions taken at the European level. With a view to fiscal equivalence, it would be appropriate also to collect the taxes required to finance such expenditure at the European level. Apart from that, any attempt to reform the EU's system of own resources should also be aimed at its simplification.