Minister of Finance calls for tax shift of 1.2 billion

“Some things can’t wait,” said the CD&V deputy prime minister in an interview with the newspaper. In the margins of the budget preparation, the federal government is working on a restart and transition plan to give the recovery after corona an extra push and to cool down the labor market, which is struggling with an enormous shortage. According to Van Peteghem, this requires an accelerated fiscal intervention to make working and especially more work more attractive.

“In the interprofessional agreement that the social partners concluded in June, we found that the increase in the minimum wage, which will be rolled out in the coming years, creates a promotion trap. The government then agreed to do something about it. I think the solution lies in extinguishing the special social security contribution (BBSZ), which all employees have paid since 1994. Jean-Luc Dehaene (CD&V) introduced this contribution to get Belgium into the eurozone, but because the rates and the limits were never indexed, the fiscal pressure has today shifted from the upper to the lower middle class. As a result, it also causes an inactivity and promotion trap,” says the minister.

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Tax reduction of 700 euros per year

Van Peteghem gives a concrete example. “Whoever works on the minimum wage pays 57 euros BBSZ per year. If he receives a salary increase of 100 euros per month due to promotion or more working hours, the BBSZ increases to 152 euros and he loses a full month’s mark-up. Raising the minimum wage will further reinforce this. What the government gives with one hand, it takes away with the other. We have to do something about that now. During the corona crisis, many people have continued to work in difficult circumstances, who have not received corona support and who also do not feel the increase in the minimum wage. For those people, too, working may pay more than not working.”

Van Peteghem wants the BBSZ to be phased out in four phases: 2022, 2024, 2026 and 2028. For a family with an average wage, that amounts to a tax reduction of about 700 euros per year in 2028. The measure costs 1.2 billion euros, but must be budget neutral. This means that it concerns a burden shift (tax shift) to other income. The CD&V member looks, among other things, at what he calls the excesses in the system: the favorable tax regime for professional football players, the tax advantage for the second home and the improper application of the favorable regime to copyrights. “In addition, there is also the securities tax.”

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