Budget: government won’t undermine purchasing power

The Belgian government has reached an agreement on the budget and on several major structural reforms worth a total of 3 billion euros. Deputy Prime Minister Jan Jambon is pleased: “We have managed to comply with European rules, while remaining in a position to weather any opposition that comes our way.” The proposal tabled by Minister of Finance, Johan Van Overtveldt, concerning corporate tax reform is ready to be rolled out. “We need to simplify the system and reduce the tax burden on SMEs,” the Minister says in relation to this topic. “Our SMEs deserve a fairer tax system”.

This major budget operation will save 70% in spending cuts. “With government spending at over 50%, this is the right strategy,” emphasises Van Overtveldt. In addition to a proportion of 10% derived from various sources of income, including dividends, the remaining 20% will be generated via tax measures.

Realistic figures

“There is no threat to purchasing power. The average man or woman on the street will not get hit by any new taxes, nor will we cut into any of the benefits of people who genuinely depend on them. There are also no new taxes on labour in the works”, the Minister states. “By modernising Belgian labour law we are adapting our labour market to meet the needs of the 21st century - without excessive administrative red tape and without any additional increase in labour costs.”

Where Social security Social security is currently managed at the Federal level in Belgium. The most important pillars of Belgian social security are: sickness and invalidity insurance (NIDHI), pensions, unemployment insurance and child allowances. In addition, occupational illness, occupational accidents and annual holidays are dealt with at this level. Some Flemish parties have been campaigning for years for (large parts of) social security to be transferred to the Regions and Communities. social security is concerned, smart savings have been made in the field of healthcare provision, but without undermining patient care in any way. In addition, the rising costs associated with civil-service pensions have been curbed. Those working in the public sector will also have to remain in the workforce for longer.

Minister Van Overtveldt also confirmed that the method used to estimate income would be adjusted to ensure that the government has realistic figures to work with. “In the meantime, we will incorporate a buffer to cushion against the impact of any anomalies.”

Tax measures

Some 20% of the budget will be derived from tax measures, which will include, among others, a 3% increase on withholding tax, bringing it to 30%. A legislative amendment will also be created to address the issue of withholding tax evasion. “One technique which is frequently employed to evade withholding tax is that of lodging shares in a holding company. We will be closing this loophole,” says the Minister.

The speculation tax, which resulted in disappointing returns on the stock-exchange tax, is to be abolished, and the latter tax itself will also be amended: the threshold at which the stock-exchange tax currently applies will be raised for Bonds A loan to a company or a government, which is paid back with interest. In contrast to shares, most bonds have a fixed duration and a fixed interest, which is usually paid out on an annual basis. Therefore, as a general rule, bonds have less risk than shares. bonds , shares and investment funds. From now on transactions via foreign brokers will also be subject to the stock-exchange tax.

“We will also be making adjustments to car taxation, in particular in the context of employers’ taxation”, Minister Van Overtveldt announces. “Deductions for fuel costs will be restricted, but as far as employees are concerned, there will be no change. We need to move toward using more environmentally friendly vehicles, and toward a mobility budget that offers more options.”

One final measure which Minister Van Overtveldt highlights is the previously agreed abolition of tax credits (reimbursement by the tax authority) for asylum seekers. “Further adjustments will now be made along the same lines,” says the Minister. “Other tax advantages, too, will be dependent on the recipient having a job, or having been resident in the country for a minimum period.”