Governments agree on budget balancing act
6 July 2005, BRUSSELS — The federal government, regional and community governments reached an in-principle agreement over the mid-year review of the 2005 Budget
6 July 2005
BRUSSELS — The federal government, regional and community governments reached an in-principle agreement over the mid-year review of the 2005 Budget
However, every government still needs to officially ratify the agreement, with the Wallonian regional government due to start proceedings on Thursday.
The Flemish government will then ratify the agreement on Friday, as will the federal government, newspaper 'De Tijd' reported on Wednesday.
Now that an accord has been reached, sources said the budget can be quickly finalised because the federal government is largely finished with preparations.
An estimated EUR 500 million in budgetary measures are being drawn up to keep the 2005 budget in balance.
The budget deficit started to open up after forecasts reduced expected economic growth from 2.2 percent to 1.5 percent, newspaper 'De Standaard' reported.
The federal government was tightlipped about the budgetary plans, but an improved recovery of CO2 taxes on company cars is expected to help close the EUR 300 to EUR 350 million hole in the social security budget.
Higher excise taxes on alcohol — leading to higher alcohol process — and a 21 percent BTW tax on digital televisions are also expected to help balance the budget.
However, it remains unclear how the government intends to finance the unexpected cost-of-living index.
When the government drew up the 2005 budget, it did not expect that social security benefits and public service salaries would not need to be indexed for higher costs of living.
However, it looks likely that an index of 2 percent will be recorded this year, costing social security EUR 200 to 250 million.
Further details about the budget will be made clear after the Federal Cabinet's weekly meeting on Friday.
[Copyright Expatica News 2005]
Subject: Belgian news