Historical tax shift reduces the tax burden and increases spending power

The government reached an agreement on the budget for the so-called Tax shift There is a tax shift when a new tax is implemented or an existing tax is increased in order to reduce or get rid of another tax. The N-VA is a proponent of a shift of the burden on labour to that on consumption or environmental pollution, for example, but not of a tax that increases the total burden of taxation. tax shift . The result is that the spending power of the citizens will increase, the employment taxes will decrease and thousands of new jobs will be created. “This government will provide the largest post-war tax reform,” says Johan Van Overtveldt, Minister of Finance (N-VA). “What we are doing is unprecedented because, in reality, the ‘tax shift’ is actually a ‘tax cut’.”

This year, the government needed nearly 1 billion euros in order to limit the budget shortage to 2.5 percent, as per the agreement with Europe. This promise has already been kept. Furthermore, the money is coming almost entirely from cut-backs to the government system. Because tax years 2017 and 2018 promise to be challenging, the N-VA insisted on taking that into account for this budget. That is why structural reforms for the amount of 1 billion euros have also been registered.

Spending power increases
The most obvious change for the citizens is that, as from 2016, low and average incomes will gain 100 euros net per month in spending power. This extra spending power will be noticeable for all employees in the coming years. So the government continues rewarding those who are employed. In addition, they will spend well over 1 billion euros on the lowest benefits and pensions by means of the Prosperity envelope A “piggy bank” that serves to keep the lowest benefits, and especially pensions, and the replacement incomes inflation-proof. prosperity envelope .

Furthermore, a remarkable tax shift will take place. This tax shift will amount to approximately 8 billion euros by 2020. The motto is equal distribution between spending power and Competitiveness The extent to which companies in one country can compete with similar companies in another country. A law came into force in Belgium in 1996 to monitor competitiveness. This stipulates that Belgian salaries may not evolve faster than the average of those in the three neighbouring countries. The Central Economic Council (CEC) performs an annual measurement to see if the objectives have been obtained. competitiveness .

Tax shift becomes tax cut
The earnings will be invested entirely in lowering costs. Because costs will decrease more than the increase in earnings, the tax shift will in effect be a tax cut. The government will shift taxes towards, among others, polluting and unhealthy products. Next to a tax increase on diesel, tobacco and alcohol, a health tax will be introduced that includes heavy taxes on, among others, drinks with a high sugar content. The revenue from the tax on income derived from dividends, which changes from 25 to 27 percent, will be used as a tax incentive for SME investments. The savings accounts will be left untouched, no matter what.

People who sell their shares within six months of purchase will have to pay a speculation tax. The so-called “Cayman tax”, or Transparency tax Also known as the “Cayman tax”, after the Cayman Islands, one of the largest tax havens in the world. A transparency tax allows the tax authorities to look through complex financial structures abroad and to tax the assets in these in their country, if the assets were only parked there in order to avoid taxation. transparency tax , will discourage tax evasion via foreign structures. The reduced VAT on electricity introduced by the previous government that used up half a billion euros of the budget will be restored to its previous level of 21 percent. The OECD The Organisation for Economic Cooperation and Development (OECD), established in 1961 as a result of the Marshall Plan, is a cooperation agreement between 34 countries in order to study and coordinate social and economic policy. The member countries try to solve their problems jointly and to mutually align their international policy. The organisation also collects statistical information to make comparative analyses. These OECD analyses are a valuable basis for the N-VA to test policy against itself or even to give shape to it. OECD and the IMF The International Monetary Fund (IMF), established in 1945, focuses on monetary issues. The global organisation is governed by and accountable to the 188 member countries. In addition to financial stability, monetary cooperation and international trade, the IMF promotes and supports employment, sustainable economic growth and combating poverty. In this regard, it provides loans, technical assistance, specialised training courses and advice to governments. It also monitors financial trends. IMF also find this necessary. However, the higher net wages will present a benefit that outweighs the extra VAT and taxes.

Wage handicap The extent to which salaries in a certain country are higher than in one or more competitive countries. As a general rule, a wage handicap has a negative impact on economic growth and on the creation of jobs. This is why there has been a law in force since 1996 which stipulates that we may no longer build up any additional wage handicap. Wage handicap disposed of completely
The government has the unprecedented ambition to use the revenue created by the tax shift to completely dispose of the wage handicap as compared to our neighbouring countries. The employer contribution will decrease from 33 to 25 percent.