“The Highest Tax Burden on Wages in the OECD: The Situation in Belgium”

Of every 100 euros that an employer allocates for the wages of an employee without dependent children, 53 euros goes to the government in Belgium: 20.7 euros to taxes, 11 euros to social security contributions for the employee and 21.3 euros to National Social Security contributions for the employer. This is evident from the new report by the OECD (Organization for Economic Co-operation and Development) on the tax burden on wages. That person therefore has only 47 euros left of that 100 euros. For those who have no children and who earn a little more, the situation is even more dire: they only have 41 euros left of the same 100 euros.

With that 53 percent tax burden, our country is alone in first place of all 38 OECD countries, with a lead of 5.2 percentage points over Germany. In France it is only 47 percent and in the Netherlands 35.5 percent. The percentage has increased by 0.65 percentage points in 2022 compared to a year earlier, putting us at the highest level in five years.

According to the OECD, the main explanation for this significant increase is the fact that the tax scales were indexed only with a delay, which meant that people automatically had to pay higher rates in view of the high inflation. But that effect should be eliminated next year.

For a family with two children where one partner works, the average wage is taxed at 37.8 percent. This puts us in third place after Finland and France.

It has often been pointed out that a single person in our country is taxed more, but the reality is more nuanced. “The difference only has to do with the children,” says Mark Delanote, professor of tax law at Ghent University. “Between a single and a married couple without children, where both partners work for an average wage, there is no difference from a tax point of view: then tax is charged at the same percentage. In other words, a single person with dependent children will also be taxed lower, just like a couple with children.”

Tax reform

“It is important to point out that the OECD study only deals with 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.