Eco-cheques, luncheon vouchers, company car – reforms of Belgian tax system proposed
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Eco-cheques, luncheon vouchers, company car – reforms of Belgian tax system proposed

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Some long-standing tax benefits could be adjusted or disappear completely, according to a blueprint for a radical overhaul of the tax system, produced by the High Council for Finance, De Tijd reports.

The High Council is a body set up to advise the federal government on financial matters, including taxation. It is made up of academics and senior civil servants nominated by political parties, and thus represents a wide variety of opinions.

The High Council was asked back in 2017 by then finance minister Johan Van Overtveldt (N-VA) to draw up a blueprint for a major reform of the tax system in Belgium – a request repeated by his successor Alexander De Croo (Open VLD) after N-VA left the Michel government in December 2018.

The work is now ready, and De Tijd expects it to be handed over to the caretaker government of Sophie Wilmès next month.

In the meantime, the paper reports on the main lines of the blueprint.

The High Council lays out six possible systems for consideration. One looks very much like the system in place at present.
One replaces the existing four tax rates by two – 25% and 45%. Another suggests a flat tax with a single tariff. These two are considered to be the contribution of the liberal parties MR and Open VLD.

Tax everything on a progressive scale, say the socialists of SP.A and PS. Finally, another left-wing favourite: an increase in the work bonus, the discount on tax allowed for those on low pay.

Then comes the CD&V alternative, the so-called dual income tax, under which earnings on assets are taxed at a flat rate, while earnings on work are taxed progressively. Depending on the flat rate on assets, that would make work more attractive as a source of earnings.

But the measure would cost the treasury an estimated €5 billion, which could be recouped, the report suggests, by trimming severely the many different tax deductibles that make filling out a tax declaration such a Herculean labour.

Among the simplifications suggested – scrap the giving by employers as non-taxable income such inventions as luncheon vouchers, eco-cheques and culture cheques. Also, the existing regime of deduction of real expenses would be scrapped for salaried employees and business leaders, although it would continue for the self-employed.

And most controversially of all, a whole new look for the company car, which would end up costing the employee five times as much as now.

The blueprint, like all proposals from the High Council, is considered a starting place for debate, rather than a proposal to be implemented as-is.

Alan Hope
The Brussels Times