Beyond slogans: the federal budget

26 December 2016
Beyond slogans: the federal budget

The federal budget is under fire by the opposition parties. There is no dispute that the reorganisation of government finances has turned out to be more difficult and slower than anticipated. However, that does not detract from the fact that the shift has been put in motion - for which the Michel government is certainly making a crucial difference, and which also includes the budget. For example, this government is the first in ages to effectively and successfully decrease government spending: it has brought it down by eight billion between 2014 and 2017. Conclusion: the dynamic behind the fiscal policy differs fundamentally from the previous government.

Especially the accusation that the Di Rupo government did better with the reorganisation of government finances holds no water. When the Di Rupo government took office at the end of 2011, the structural budget deficit was more or less at the same level as the European average and was a big higher than that of our neighbouring countries. By 2014, the neighbouring countries and most European countries had thoroughly adjusted their budgets: the average deficit was around or under one percent. In Belgium, that deficit remained around three percent.

Consciously choosing the hard way

The Di Rupo government clearly chose the path of least resistance: it did not cut back on expenditures, made few reforms and certainly no structural ones, and mainly increased its income through taxes. Thus, precious time was lost. This government intentionally chose the hard way by decreasing government spending and carrying out structural reforms, including an historical 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 that ensures lower wage costs and higher net wages. In the short term, this yields a less impressive result and results in smaller economic growth. But in the long term, this will result in less expenditures and greater economic growth.

So compared to the Di Rupo government, the contrast could not be any greater. And it’s precisely because this government has needed to catch up on what the Di Rupo government should have already done that the efforts needed will continue to weigh heavy on the hard road ahead and for the years to come. But that Change Works? There’s no denying it.

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