‘A matter of justice’: Tax reform that favours Brussels would require special amendment

‘A matter of justice’: Tax reform that favours Brussels would require special amendment
Brussels skyline. Credit: Orlando Whitehead

A state reform that would transfer the community competencies of Flanders and the French-speaking Community to Brussels in order to help cover budget deficits is not possible without adapting the Special Finance Act amendment, according to Brussels Finance Minister Sven Gatz.

Gatz requested a study from the Université Libre de Bruxelles (ULB), Université de Namur (CERPE) and Université de Liège (Tax Institute), Belga News Agency reports, that examined the hypothesis of a seventh state reform after 2024 with all four Regions (Flanders, Wallonia, Brussels, Ost-Belgien) and less or no impact from the Communities.

In that hypothesis, the community competences of Flanders and the French Community would be transferred to the Brussels Region. The study now makes it clear that transferring these community competences would require an amendment to the Special Finance Act.

Taxing people who work in Brussels but live in Flanders or Wallonia

The hypothesis and study came about when looking for ways to balance Brussels’ budget. The Brussels Region doesn’t raise enough tax revenue to pay for all its costs.

If the resources and powers are transferred in proportion to the existing financial packages and flows (25% of the personal income tax collected in Brussels, which amounts to about €1 billion), this is insufficient for Brussels to be able to exercise the powers of education and culture with all the obligations.

A larger share than 25% of the personal income tax collected in Brussels should therefore also (on the basis of place of work rather than residence) actually remain in the Capital Region.

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In that case, the national solidarity mechanism from the current Special Finance Act could be reduced in favour of Brussels by the increased share of personal income tax for the Brussels region.

Gatz points out that, according to the National Bank, Brussels is the only net contributor to the Belgian federation, together with Flemish and Walloon Brabant (and to a lesser extent East Flanders and Antwerp).

“An increased share of personal income tax would therefore be a matter of justice for Brussels. After all, the Brussels Capital Region accounts for almost 20% of the country's wealth creation (GDP),” Gatz said.

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