“The Highest Tax Burden on Wages in the OECD: A Look at Belgium’s 53% Rate”

In Belgium, of every 100 euros that an employer allocates for the employee’s wage, 53 euros goes to the government: 20.7 euros to taxes, 11 euros to social security contributions for the employee and 21.3 euros to social security contributions for the employer. At least that is the case for a single person without children with an average wage, according to the new report by the OECD (Organization for Economic Co-operation and Development) on the tax burden on wages. A single person therefore has only 47 euros left of that 100 euros. The situation is even worse for single people with a higher wage: they only have 41 euros left of the same 100 euros.

With a tax burden of 53 percent for single persons, our country alone ranks first among all 38 OECD countries, with a lead of 5.2 percentage points over Germany – in the Netherlands it is about 35.5 percent and in France about 47 percent. The percentage for single people increased by 0.65 percentage points in 2022 compared to a year earlier, bringing us to the highest level in five years. In 2000, the tax burden was even higher: 57.1 percent.

For a family with two children where one partner works, this is even an increase in one year from 1.34 percentage points to 37.8 percent. Incidentally, it is mainly dependent children who account for a much lower percentage here than for single people. According to the OECD, the main explanation for the sharp increase in one year is the fact that the tax scales were indexed only with a delay, which meant that people automatically had to pay higher rates due to high inflation. But that effect should be eliminated next year.

Tax reform

“It is important to point out that this only concerns cash payments,” says Mark Delanote, professor of tax law at Ghent University. “It therefore does not include forms of remuneration that are tax or parafiscally advantageous, such as company cars, options, warrants, meal vouchers and eco vouchers. However, both the OECD and the IMF have already indicated that Belgium is also a leader in those kinds of special benefits.”

The biggest victims of such a high tax burden are the average earners who are not entitled to such benefits. The tax reform, which Minister of Finance Vincent Van Peteghem (CD&V) is now advocating, would extinguish many of those regimes and reduce the tax burden. “With a budgetary effort of 10 billion euros, we could reduce the tax wedge by about 5 percent,” says Delanote, whose vision paper serves as the basis for that tax reform. But for now there is a lot of political opposition and the question is whether anything will move before the next election.