The extension of tax havens to the gaming sector is a big mistake. The Federal Government and the Minister of Finance should rather finally get started on serious tax reforms.
At the beginning of this parliamentary term, Finance Minister Vincent Van Peteghem (CD&V) was given the Herculean task of tackling fiscal policy. Our tax system is a chaotic mess where virtually all sectors or professional groups benefit from a deduction or a favorable tax regime. Our democracy is being darkened by a lobbying democracy. No one in Rue de la Loi seems to have the courage to bring order out of chaos and finally do something about the gigantic tax burden in this country.
The new tax haven proposal is yet another painful example of an interest group making a comeback to the detriment of taxpayers.
The Vivaldi government has promised major fiscal reforms for several months. So far, it is deafeningly quiet. The federal expertise only reached agreement on the extension of the tax haven system to the gaming sector. Meanwhile, taxes on labor and capital remain sky-high, and people do not have the courage to look taboo on new forms of environmental taxation, where Belgium still has a large margin. The Skattely proposal is by no means the major tax turnaround that our country so badly needs, and again a painful example of an interest group doing its job to the detriment of taxpayers.
- The author: Pieter-Jan Van De Weghe is a board member of Liberaal Vlaams Verbond (LVV).
- The case: The federal government wants to extend the tax haven system to the gaming sector.
- The proposal: That extension is a big mistake. The government and the finance minister would rather put that plan away and finally work on serious tax reforms.
Today, the favorable tax regime of the tax haven applies only to the audiovisual sector and the performing arts. The system works as follows: Investors can invest their tax money directly in a freely chosen cultural project. Thanks to the legally guaranteed tax advantage, they are left with an average return of 5 percent. The extra job creation must feed the treasury. Game developers are obviously excited about the expansion into their sector.
The national game sector is in full bloom. Year after year, revenue and the number of developers increase. With Larian Studios, Flanders even has a world-renowned player. It is also on the world map in education. At Howest University of Applied Sciences in Kortrijk, the bachelor’s program Digital Arts and Entertainment has been doing well for several years now. In five years, she has been named the world’s best play school three times. Students from all over the world come to Golden Spurs City to follow the training.
Another reason, one would think, to give the gaming sector a boost via tax havens. However, there are many reservations about the plans.
The gaming industry is in booming health and can report staggering growth rates year after year. While the cultural sector has seen every corner of the room due to the pandemic.
First, the extension of tax havens is not limited to Belgian territory. The European Commission found that the Belgian plans provide an unfair competitive advantage over other players in the European market. Therefore, non-Belgian companies active in Europe can also use the system. De facto, the federal government is organizing a raid on the Belgian treasury in favor of foreign companies.
Second, the Court found that it is virtually impossible to predict how much the extension of the favorable tax regime will cost the government. A conservative estimate resulted in a drop in revenue of 10.3 million euros. It is not unlikely that costs will increase due to the large appeal of the tax haven to foreign companies. In these financially uncertain times, when all financial alarms are in the red, it is completely irresponsible to write a bad check to the gaming lobby.
Thirdly, unlike audiovisual or performing arts, there is no obligation on the gaming sector to allow production to take place physically on Belgian territory. Employees in the gaming sector are extremely flexible. Their work can be performed perfectly at a distance abroad. What assurance does the federal government offer that even one euro will be spent on production costs in Belgium?
Fourth, there is the observation that the gaming sector is in excellent health and can show staggering growth rates year after year. While the cultural sector has seen every corner of the room due to the pandemic. It is not inconceivable that the tax havens used by the cultural sector will flow away to the gaming sector. In other words, the pie does not necessarily get bigger, but is further divided. It can hardly be called fair.
Belgian public finances are in very difficult weather. An extension of the tax haven system to the gaming sector is another step in the wrong direction. Instead, work on a tax reform worthy of the name. The taxpayer thanks you.