Budget surplus for 2007 will be achieved

19 March 2007

BRUSSELS – After three days of meeting the Verhofstadt government reported on Saturday evening that it will be able to maintain a surplus of 0.3 percent of GNP on the budget this year.

The loss of a large part of the expected revenue from a packaging tax that the government wanted to introduce will be compensated by several smaller environmental taxes: EUR 67 million from tax on disposable packaging (plastic bags, plastic cling film and disposable cutlery) and EUR 65 million from cars that damage the environment.

Anti-fraud measures are expected to yield an additional EUR 90 million. Revenue from company tax is turning up higher than expected.

The cabinet also found extra money for a number of smaller social, economic, and environmental measures. The government also cushioned the expected rise in expenditure on interest on the national deficit – EUR 131 million – as well as the cost-of-living adjustment for civil service salaries, which is needed somewhat earlier than expected.

Prime Minister Guy Verhofstadt (Open VLD) and Budget Minister Freya Van den Bossche (Socialist SP.A), stressed that the government is being cautious. Although the growth figure will probably be higher, the budget is based on a prognosis of 2.2 percent. Moreover there will be no tampering with the accrual of reserves in social security.

There will even be a surplus of EUR 368 million in social security. The government will also allow the reserves in social security to increase further to EUR 3.3 billion. One of the reasons behind this positive development is the increase in employment, which will ensure a decrease in unemployment expenditure.

Three measures are being introduced to support research and innovation in particular: revenues from patents will be taxed 80 percent less. This should encourage businesses to register patents in Belgium. In addition the minister for the Economy Marc Verwilghen (Open VLD) will be allowed to invest in nuclear fusion and in Belgian participatoin in Airbus 350.

The government also reported that the decrease in the deficit is “on schedule” and that the taxes on labour have fallen from 26.7 percent in 1999 to 25.1 in 2005.

Subject: Belgian news