Unbridgeable chasm between PS and Open VLD remains

22nd November 2011, Comments 0 comments

After PS formateur Elio Di Rupo’s failure to convince the liberals to accept his final offer in the early hours of Monday, he called a meeting with all party presidents at 14:30 later that day. During the meeting he asked the six parties whether they were willing to accept the compromise that constituted his final offer and that was only susceptible to minor adjustments. After the refusal of Open VLD and the MR to accept the final offer, Di Rupo concluded that he had made enough concessions and went to to the king to hand in his resignation. After three adjustments to his budget proposal in as many days to convince the liberals, he refused additional concessions. In his final offer he had reduced taxes by 2 billion euro and raised savings to the same level. Compared to his initial offer, which included only 25% of savings, the final offer was twice as high. The liberals, especially Open VLD and to a lesser degree MR, were however convinced the ratio between savings and taxes was still unbalanced. They felt the 2.8 billion euros of taxes on 11.3 billion euros in budget cuts is excessive, since extra bank taxes, nuclear taxes and the additional income from the fight agains fiscal fraud are not included. They continue to insist that an additional 650 million euros must  be earned from cuts in social security and civil service. The PS, CD&V, SP.A and CdH, on the other hand, do not see the merit of unlimited expenditure cuts, believing one should consider the limits. However the deadlock in the debate was more due to Di Rupo's lack of willingness to launch socio-economic reforms than to the unbalanced savings/income ratio. The Flemish liberals were willing to make allowances as far as tax talks were concerned if Di Rupo was willing to tackle certain major reforms. The latter refused to enter into debate on changes to the system of automatic wage indexation. Some progress was made concerning reforms in the end of career  and retirement regulations, but according to the liberals the proposed adjustments should be accelerated. They also believe that early retirement at the age of 52 is overindulgent. Di Rupo was further criticized by the liberals for his job market proposals and his insistence on gradually reducing rather than completely phasing out unemployment benefits. The liberals believe Di Rupo is unwilling to hurt the thousands of Walloon job seekers who form part of his electoral public. Without reforms to the indexing system and the job market, they feel Belgium will fail the European and financial market stress tests. While Open VLD has lost the support of most other parties around the negotiation table, the party believes Europe’s recommendations should be honoured.

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