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Social security reform plan unveiled

Published on 14/07/2005

14 July 2005

BRUSSELS — Social Affairs Minister Rudy Demotte has unveiled reform plans changing the way the Belgian social security system is financed.

The Francophone Socialist (PS) minister said the costs of healthcare must be shared with greater “solidarity”, Dutch-language broadcaster VRT reported on Thursday.

Demotte said contributions from low-income earners and people aged 50 or older must be reduced. This would boost their purchasing power and make them cheaper for employees.

But for high-income earners, a sharp increase in social tax contributions can be expected under Demotte’s plans.

High-capital and low-employee companies would also be forced to pay more into the federal government’s coffers. A tax would be added to the “added value” of a product.

Another important aspect of the plan involves adjustments to social benefits in times of prosperity.

Social security services would be allowed to raise benefits on a yearly basis, which would lead to greater purchasing power and economic growth. In times of poor economic growth, the social services will not be allowed to boost payments.

The plan does not contain any details about raising BTW taxes (VAT in English) to fund a cut in income tax, as proposed by Prime Minister Guy Verhofstadt recently.

Demotte said studies by the National Planning Bureau have shown that VAT increases will lead to reduced consumption and production.

[Copyright Expatica News 2005]

Subject: Belgian news