The unions ACV and CD&V use Rerum Novarum to highlight the importance of tax reform. This summer, Finance Minister Vincent Van Peteghem will present a plan. Given the tensions in the coalition, the question is how far the government will jump.
“The tax burden weighs predominantly and far too heavily on income from work and far too little on wealth. Meanwhile, the lower middle class is declining and there is an increasing concentration of money among the elite ‘, says ACV chairman Marc Leemans in an interview on the occasion of Rerum Novarum, the Christian labor movement’s party.
In his tax reform, Finance Minister Vincent Van Peteghem (CD&V) should lower taxes on labor, Leemans believes. While Belgium is the world champion in labor costs, according to the OECD, the think tank of the industrialized countries, the gross profit of companies ‘breaks one record after another’. Peter Wouters, chairman of movement.net, the network of social organizations, talks about ‘profiteering’.
According to Leemans, the large assets must make a ‘fair contribution’, whether it is on investment gains, rental income or their outstanding assets. The union sees potential in a wealth tax of 1 percent on any wealth between 1 and 1.5 million euros, at a rate that increases as wealth grows. The idea sounds like a breakthrough of the socialist May 1 balloons: tax on wealth and tax on profits.
The tax burden weighs predominantly and far too heavily on earned income and far too little on wealth. Meanwhile, the lower middle class is declining and there is an increasing concentration of money among the elite
They are calls for a major tax reform. Where this was still lacking in Prime Minister Alexander De Croos’ (Open VLD) summer plans on Monday, Van Peteghem promised he would go to the government with a plan for the holidays.
Koterij and favorites
The basic principle here is that taxes on labor should be reduced. “People need to feel that they are making the right contribution and that the right burdens are on the right shoulders,” Van Peteghem said on Radio 1. The tax reform will not be limited to employment alone, but will also include pension reforms or energy bills. The Van Peteghem cabinet does not want to say whether it is a tax cut or a shift – with more taxes on consumption, capital or pollution.
The fact that the CD & V Deputy Prime Minister is urging the parties to get out of their ‘ideological trenches’ shows that it is difficult to maneuver. PS does not want to hear about a higher VAT rate, while the Liberals are not crazy about more taxes on wealth. MR has previously opposed the abolition of what Leemans calls ‘kosher and favors for top footballers and people who are able to tax a second or third home’. ‘This injustice creates so much anger that it is a threat to democracy,’ says MR. Leemans.
Wage standard law
According to Leemans, the wage standard law, which the Michel government has tightened, is another reason why ‘people choose extremes’. Because wages are already rising sharply this year thanks to the automatic indexation, there may be no margin for additional surcharges in wage negotiations at the end of this year. It would harm our competitive position – protected by the wage standard law – too much vis-à-vis our neighboring countries. “We always come to the table, but the unions have already said that we will not reach an agreement on the wage standard unless the law is changed,” he says.
I can not hide how disappointed I was with our social partners. A unique consultation system as we know it in our country, created to protect our prosperity, risks becoming a loop for our future.
The fact that the wage standard law for the liberals can only be revised if the automatic wage indexation also disappears, shows that there is also some leeway in that area. Van Peteghem immediately sided with ACV in that regard. “Yes, our competitive position is important, but the index is a crucial buffer that we must not destroy,” he said in his speech in Ghent.
Ointment and beat
But after the anointing, the deputy prime minister struck the union over the failed negotiations on the employment contract, which, among other things, eases the rules regarding evening work in e-commerce. ‘A unique consultation system as we know it in our country, created to protect our prosperity, risks becoming a loop for our future.’
The error does not bode well for truly radical reforms, knowing that experts labeled the employment contract as deficient. The stalemate between unions and employers is a painful finding for the government, which in its coalition agreement agreed to call for social dialogue on many issues. Its failure thus shows the broader difficulties of reaching agreements in this country.
And that while the challenges that the European Commission once again listed this week are no less: rising debt, inefficient taxes, inefficient benefits and unaffordable pensions. With a summer agreement, reforms must follow on a number of those points. But given the tensions in the multicolored coalition, it will be an extremely difficult task.