Help the refugees

If you move around the world by choice, consider helping those forced from their homes by conflict. Donate to the UN Refugee Agency today.

Home News Funds needed for recovery plan

Funds needed for recovery plan

Published on 14/06/2012

According to macro-economic figures released by the Planning Bureau, economic growth for this year will reach 0.5%. This is somewhat better than the 0.1% expected by the government during its budgetary control in March this year. Prospects for lower interest rates have also improved, with the Planning Bureau changing its 3.8% on long-term interest to 3.3%, which will of course reduce the interest on public debt. Both these factors will positively affect the final budget, with  figures indicating a budget deficit of only 2.6% of the GDP, which is better than the 2.8% agreed upon with Europe. This effectively means that the government will not be faced with additional savings or taxes during its budgetary control in mid-July which, considering the upcoming municipal elections, could seriously benefit the government parties. In view of the government’s intention to release funds for an economic recovery plan, the six coalition parties are up for a heated debate in mid-July as the hundreds of millions the government plans to allocate to social contribution cuts for businesses and employees must be offset by savings and/or new taxes. The liberal Open VLD is opposed to a generalised ‘wealth tax’ while the CD&V party’s Finance Minister Steven Vanackere is toying with the idea of increasing the withholding tax from 21% to 25% for everybody, not only the wealthy. His proposal seems to enjoy the backing of many other parties. The approximate 400 million euros this is expected to yield could then finance a portion of the planned social contribution cuts for businesses. At present only those taxpayers that earn more than 20,020 euros a year are liable for a 25% withholding tax, but this controversial regulation has had practical implications: firstly because all taxpayers are liable to declare their income from movable property and secondly because the receiver of revenue is to introduce a centralised register that groups income from movable property, which some consider to be a transition to a registry of individual wealth. The liberal parties’ opposition to this ‘socialist’ plan of a generalised wealth tax is that the centralised register for income from movable property and the obligatory declaration of income from movable property will remain intact. Moreover the federal government will also need to seek elsewhere to fund its planned social contribution cuts. One school of thought is to increase VAT, but after the country’s biggest opposition party, the N-VA, proposed the same thing yesterday, Flemish parties may find this hard to support.