Paying lower taxes? Belgium considers adjusting personal income tax

Paying lower taxes? Belgium considers adjusting personal income tax
Credit: Belga

Belgium's Federal Government is looking into adjusting personal income tax, in order to raise the tax brackets more quickly and align them with the rise in wages due to inflation.

There are currently four tax brackets in Belgium, with rates increasing from 25% to 50%. Those brackets are adjusted once a year to reflect the rising cost of living. This year, however, wages will be increased four times by 2% to keep up with inflation, which means that many people will end up in a higher tax bracket and pay a lot more personal taxes.

"Should a finance minister come here to announce that he was going to take €1,500 from people, he would have to resign the next day," said group chair of the Flemish rightwing N-VA party, Peter De Roover, in the Federal Parliament.

"But, de facto, that is what is happening now, because of the non-indexation of the tax brackets," he added, stressing that he was talking about the impact on a household with a median income.

"The Federal Government is taking all sorts of measures, but meanwhile, insidiously, people are paying €1,500 in extra taxes. Through index adjustments, not though wage increases," De Roover stressed. "That is money that they would normally be able to spend themselves as they see fit."

Federal Finance Minister Vincent Van Peteghem, however, explained that while the indexation of the salary is indeed an element that must be included in the broad tax reform, "such a thing does, of course, have a large cost."

While Van Peteghem spoke of a cost of €1.5 billion in the Parliament, his cabinet clarified to Het Laatste Nieuws that that figure was only theoretical, as not everyone will end up in a higher tax bracket.

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The Flemish socialist party, Vooruit, stressed that the goal is to strengthen the lower and middle incomes. "The faster indexation of the tax brackets could be a means to achieve this. Vooruit would preferably increase the lower brackets first, the higher brackets may be a bit later."

Meanwhile for the Flemish liberal party, Open Vld, faster indexation is only logical, as "tax brackets follow wage growth." The party added that a faster indexation system should ideally be part of a wider tax reform.

The party's Francophone counterpart, MR, has been calling for an adjustment of the tax brackets for a while already. "In Belgium, you fall into the high 50% bracket relatively early, starting at €2,130 net," the party said. "We consider any acceleration in raising the tax brackets positive."

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