European Commission warns against purple-green castles in the air

Secretary of State Eva De Bleeker (Open VLD) presented the first purple-green coalition budget and her policy statement in the House of Representatives. “Do you remember that picture of former Open VLD president Gwendolyn Rutten blowing a purple-green bubble? That picture perfectly sums up this budget,” the N-VA says. “Income is overestimated, expenditure is underestimated. The European Commission is also warning the Belgian government not to consider itself rich. Moreover, no margin is built in for the rising costs of the coronavirus pandemic and Brexit. In other words, it’s a budgetary castle in the air. What is already certain is that there will be a lot of extra taxes.”

Drawing up a budget in uncertain times of crisis is not easy: predictions are difficult to make, and the figures change quickly. “That is precisely why the N-VA is calling for budgetary prudence,” the N-VA states. “We know that Brexit is just around the corner. A “no-deal” Brexit means EUR 3.2 billion in export losses, and with a “last-minute deal” the amount is EUR 1.6 billion. We all know that, but the purple-green coalition is keeping its eyes closed. It is pretending that an internet tax and a minimum tax on multinationals will deliver the budgetary solution. But according to its own figures, these will only raise EUR 400 million from 2023, while the bill for pensions, healthcare, security, etc. will run into the billions. The Vivaldi coalition is trying to sell a bubble: it appears attractive, but there is only air inside.”

European Commission warns the Belgian government

The European Commission has just today announced its analysis of the Belgian budget. It expects the deficit in 2020 and 2021 to be higher than the government claims. “The Commission confirms the N-VA analysis,” the N-VA says. “According to the Commission, the government is too optimistic regarding tax revenues in 2020, social expenditure in 2021 and the impact on the national debt.” What is striking is that the Commission places Belgium in a group with France, Greece, Italy, Portugal and Spain. They have been given the additional warning not to lose sight of the sustainability of their budgets in the medium term.

Warning lights are flashing red

“The De Croo government does indeed seem to be seriously missing the mark in budgetary terms,” the N-VA adds. That is why the N-VA proposed having the National Bank of Belgium check the budget table. It has the task of helping to ensure financial stability and can therefore check the credibility of the figures. “Within a few years, people will say “if only we’d known that in advance.” The warning lights are already flashing red, so let’s get on with it now. Unfortunately, the purple-green coalition partners voted against our proposal. Apparently, they do not dare to undergo an independent audit by the National Bank.”

Federal government living beyond its means

It is also striking that Secretary of State for Budget Eva De Bleeker made it clear between the lines of her presentation today that the federal figures are turning red because the funding of the federal states is supposedly increasing too much. “That’s beyond crazy,” the N-VA says. “The Secretary of State seems to have forgotten that although the sixth state reform transferred additional powers to the federal states, only 87.5% of the corresponding federal resources were tied to it. The federal states have already had to make substantial savings, so it is the federal government that is living beyond its means.”

That is also striking when you look at the costs of the ministerial cabinets, the N-VA says. “Total cabinet funding rises sharply to EUR 63 million. That is EUR 7 million more expensive than for the previous Swedish coalition, which included the N-VA. And what is all the more surprising is that the cabinet of Pensions Minister Karine Lalieux (PS) will cost EUR 3.358 million, whereas it was only EUR 2.262 million with the pensions minister in the Swedish coalition, Daniel Bacquelaine. Yes, she has indeed a limited number of additional powers, but they can hardly justify an increase of EUR 1 million. We have to invest more in our lowest pensions, not in the Minister of Pensions.”

Flemish taxpayer pays for purple-green bills

The coalition agreement is very clear on one point, however. Purple-green explicitly states that, when there are budgetary deficits, they will be closed by cutting expenditure (one-third of the amount), increasing taxes (one-third) and taking “various measures” (one-third), which are usually hidden taxes. “There will be a lot of extra taxes; we have already seen that in recent weeks. Purple-green expenditures for which mainly the Flemish will have to foot the bill. That’s what you get with a government that only has a majority in Wallonia and not in Flanders,” the N-VA concludes.