Belgium Unites On 'Fairness Tax'
03 July 2013
Posted by: Author: Ulrika Lomas
Author: Ulrika Lomas
The Belgian Government has finally reached a consensus on a EUR750m (USD979m) savings package for 2013, and has agreed on EUR2.4bn of the EUR2.8bn required savings for the 2014 Budget, including plans for the introduction of a "minimum tax" on large corporations.
Underlining the fact that the Government has not merely taken the easy option of raising value-added tax (VAT) and introducing a crisis contribution, Prime Minister Di Rupo stressed that the measures are not intended to plunge Belgium into austerity, but are instead designed to protect individuals and small- and medium-sized companies (SMEs) in Belgium. The fiscal burden on labor will not rise, Di Rupo made clear.
According to Di Rupo, the Government aims to implement "moderate adjustments" to excise duty levels. As a result, excise duties on tobacco and alcohol are to rise. Furthermore, lawyers in Belgium will be subject to VAT in future under the plans.
Crucially, the Government intends to impose a so-called "fairness tax" or "minimum tax" on large corporations in Belgium. To guarantee tax equity and to ensure that everyone in Belgium contributes according to their means, the Government plans to levy the minimum contribution on enterprises that do not pay taxes, but distribute dividends, Di Rupo said, pointing out that revenue from the levy will be used to reduce the fiscal burden on SMEs.
Finally, banks in Belgium will be required to contribute, as the subscription tax will rise from 2013.
Defending the initiatives, Di Rupo emphasized that the proposals will ensure that Belgium adheres to its fiscal commitments. The European Commission has called on Belgium to reduce its budget deficit to 2.7 percent in 2013, and to improve the structural deficit by 1 percent of gross domestic product (GDP) by the end of the year.
Belgium had to find EUR524m in additional savings this year. In its planning, the Belgian Government included a safety margin of EUR226m, to enable the country to definitively exit the excessive deficit procedure, to restore confidence, and to maintain credibility on the financial markets.