Flanders receives a heavy bill from the federal budget

29th November 2011, Comments 0 comments

The Minister-President of the government of Flanders Kris Peeters CD&V earlier expressed his willingness to take over a number of federal expenses, proposing to pay a greater portion of the pensions of Flemish civil servants and relieve the federal government of expenses in the domain of regional powers like the metropolitan areas and scientific policy. The federal negotiators did not hesitate to transfer these responsibilities to Flanders and saddled the region with even more expenses in the federal coalition agreement. Among these are a tax reduction on energy-efficient measures and a rebate on the invoice of green vehicles plus a number of decisions with as yet unclear consequences for Flanders. Moreover they insisted on a more equitable distribution between the federal government and the regions of the CO2 quota earnings. This all adds up to quite a substantial bill. According to Peeters’ calculations, his administration may need to find an additional 450 million euros next year to cover all these extra expenses as a result of the federal budget agreement. And this sum does not include even the effect of the drop in the growth rate. Should growth in 2012 reach only 0.8% instead of the expected 1.6%, the government of Flanders will need to raise an additional 200 million and face a deficit of up to 650 million. In 2013 the government of Flanders will have to find 729 million euros extra and in 2014, the election year, the additional costs will amount to 979 million euros. Analysts have warned that growth prospects have been too optimistic. Minister-President Peeters now plans to discuss the issue in the government.  The question will be wether Flanders should in fact make all these additional expenses. “Should we continue to  pay the rebate on green vehicles, for instance? We cannot be forced to do so,” Peeters maintains. The discussion on the transfer to the regions of some federal expenses in respect of regional powers has not been concluded as the  Finance Inspectorate has not yet submitted its proposal. The percentage of expenses within Flanders differs from one domain to the next.

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