Understanding Belgium’s government negotiations: Tax burden

If negotiations stay on track, Belgium will have a new government very soon. The issues that could derail the talks have some specific Belgian characteristics. Belga English looks at some of those issues. Today, taxes: who pays, how much.

The most famous painting of the Belgian master of absurdity, René Magritte, shows a pipe. Underneath it says: this is not a pipe. Because it’s the painting of a pipe, not a pipe.

The same goes for the Belgian tax system. The rates are among the highest in the world, but … Belgium is also known as a tax haven. Because of the many exceptions, there are dozens of ways to -legally- escape high taxation. This has major disadvantages: people feel they pay too much and others too little, taxes aren’t fair and they distort the economy.

A thorough restructuring of Belgian taxes has been demanded for decades, and it was also the ambition of Bart De Wever, who’s trying to form the next federal government. But, as in the past, resistance is too strong. Many groups in society are afraid of losing the exceptions they profit from, and thus end up paying more taxes.

Lobbying

The original plans of the ‘Arizona-coalition’ were about a tax reform and a tax cut. Due to differences between the five coalition partners, and a lot of lobbying, it will now probably be a very small reform and an even smaller cut.

Some taxes will go up, others will go down. In general, working should be more profitable. Therefore, taxes on labour would be reduced here and there, for the profit of employers and employees. Gains on capital should be taxed a little more, with the introduction of a ‘solidarity contribution’ of people profiting from added value of an investment. This way ‘rich people should pay their fair share’.

With the huge budget problems of Belgian authorities, it would have been naïve to hope for a big tax cut. That the tax system will now probably be even more complex than before, is however not what many hoped for. ​

_{Belgian Queen Mathilde in front of the absurd painting | © ​ BELGA PHOTO BENOIT DOPPAGNE}