Belgium has once again ranked in first place when it comes to taxes paid by Belgian employees on their wages, a ranking by the Organisation for Economic Co-operation and Development (OECD), showed.
Among all OECD member countries, Belgium is the only place where more than half of gross wages are taxed. For a single person without children with an average wage, the tax burden in Belgium was as high as 53% in 2022, up from 52.6% in 2021, marking the second year of an increase in the tax rate.
"In 2022, Belgium had the highest tax wedge [defined as total taxes on labour paid by both employees and employers, minus family benefits, as a percentage of labour costs] among the 38 OECD member countries, occupying the same position in 2021," the report's country summary for Belgium read.
Germany is ranked in second place (47.8% tax wedge), followed by France (47%). Meanwhile, the tax burden for an average worker in neighbouring the Netherlands is only 35.5% slightly above the OECD average.
Singles still much worse off
As is the case in most OECD countries, Belgian families with children are provided with benefits through cash transfers and preferential tax provisions, which reduces the tax wedge for workers. This essentially means the wedge is lower than for a worker on the same income without children.
In Belgium, this reduction amounted to 15.2 percentage points in 2022, more than the OECD average of 8.9 percentage points.
For an average married worker with two children, Belgium had the third highest tax wedge in the OECD at 37.8%, up from the fifth-highest position in 2021. The OECD average for this category is 25.6%.
When it comes to the employee tax on labour income (a measure of the net tax on labour income paid directly by the employee, including personal income tax and employee social security contributions), the average single worker faced a net average tax rate of 40.3% in 2022, compared with the OECD average of 24.6%.
"In other words, in Belgium, the take-home pay of an average single worker, after tax and benefits, was 59.7% of their gross wage,
compared with the OECD average of 75.4%," the report read.
Again taking into account child-related benefits and tax provisions, this tax rate for an average married worker with two children in Belgium drops to 21% in 2022, however, this is still the seventh highest among OECD countries.
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For more than 20 years, the OECD has been ranking the burden of tax on labour. In its latest report, it stressed that taxes on labour increased last year as rising nominal wages pushed workers into higher tax brackets and reduced their eligibility for tax credits and cash benefits.
It added that, while nominal wages increased, high inflation across the OECD caused wages to decline in real terms, resulting in a "double blow for workers." The OECD explained that low-income households with children are most vulnerable to increases in their effective tax rates "when tax and benefit systems are not fully adjusted for inflation."
