The financing of the EC has been a long-standing bone of political contention both between the Member States themselves and between the Community institutions.1 Disputes between the Member States have generally been about the amounts of national contributions, for as a result largely of the workings of the Common Agricultural Policy (which the Budget classifies as spending under the European Agricultural Guidance and Guarantee Fund-the EAGGF) there have been periods when the poorest European states such as the UK and Italy have been net contributers to the Community, while the richer states of Germany, Denmark and Holland have been net beneficiaries. In the early 1980s the UK was continually pressing for a budgetary rebate to ensure that its contribution more accurately reflected its GNP, while hanging over the whole debate was the prospect that the Community financed at that time principally by a levy of 1% of the VAT raised by each Member State-would simply run out of money.