Van Peteghem starts the debate on tax reform

Before the summer, Finance Minister Vincent Van Peteghem will start the debate on tax reform and thus realize an important intention. He does this through a symposium.

Will she be there this legislature or will she not? It has been the big question for more than a year and a half about the major tax reform that Van Peteghem must prepare by 2024. The CD&V member insisted he would come up with a plan by the summer of 2022, but expectations in the federal government were lower and lower .

The essence

  • FPS Finans is arranging a symposium on fiscal policy reform on 5 July.
  • The long-awaited recommendations from several expert teams will be presented on the study day.
  • With the initiative, Minister of Finance Van Peteghem starts the debate on the reform.
  • In the short term, he hopes to have another reduction in the special social security contribution adopted.

First, information about the preparatory work of the expert team led by tax law professor Mark Delanote (UGent) was leaked by MR. Then PS blasted the preparatory work in the Danish Bankers Association out of the blue. This raises the question of whether the climate is not too toxic to lead a calm debate on the very sensitive issue of reform.

Van Peteghem continues. On Tuesday morning, many Vivaldi cabinets were surprised to receive an invitation from FPS Finans to a symposium on tax reform on Tuesday 5 July. ‘During this study day, the various policy preparatory recommendations will be discussed.’

The vision of the expert team led by Professor Delanote is considered one of the best kept secrets in Wetstraat.

The study day was organized on a large scale. First, the Supreme Court presents its recommendations, then a study on greener taxation is explained, and finally, the general vision statement on the personal income tax reform is followed by Mark Delanote’s expert team. That note is one of Wetstraat’s best kept secrets. In the afternoon, the International Monetary Fund responds to the inquiry, and Van Peteghem presents his concluding remarks.

Pension report Vandenbroucke

The form of work is reminiscent of the presentation of the Pensions Committee’s report led by Professor and current Minister Frank Vandenbroucke in 2013. Vandenbroucke was commissioned by the then Minister of Pensions Alexander De Croo (Open VLD) to develop a future plan for pensions. . The plan proposed far away from Rue de la Loi to avoid the professors’ work being directly politically pressured. Once again, the Van Peteghem cabinet stresses that the minister’s tax reform will not be presented on 5 July, but only the professors’ thinking.

The difference is that the pension reform was not immediately followed by a major political debate. It was not until the formation of the Michel government in 2014 that some of Vandenbroucke’s proposals – such as working up to 67 – were taken up. Van Peteghem wants to approach this differently. He will immediately come up with a political translation in which he will publish his vision of the tax reform. This may differ from the experts’ recommendations. CD&V is in favor of a ‘double income tax’, where work is taxed progressively and capital via a fixed rate.

New purchasing power agreement

Major decisions on tax reform are unlikely to be made before the summer holidays, but Van Peteghem wants to continue on the path he started last year when drafting the 2023 budget. He will further reduce the Special Contribution to Social Security (BBSZ). It should contribute to the attempt to make it more attractive to work than not to work and to increase the employment rate to 80 per cent.

Almost all Flemish Vivaldi parties are convinced that the employment contract approved last weekend – after 9 months of tug-of-war – has too few teeth to fight the labor market shortage. Open VLD President Egbert Lachaert wants an employment contract, Vooruit’s Deputy Prime Minister Frank Vandenbroucke wants extra steps against the lack of health care and Van Peteghem wants a reduction in taxes on labor.

Van Peteghem is expected to continue phasing out the special contribution to social security before the budget for 2023 is drawn up.

The latter can be sold as a purchasing power measure. The left-wing Vivaldi parties in particular want further measures to support lower wages on top of the recently decided extension of the reduced VAT and social rate for energy. It may be on the table in September when drawing up the budget, although it cannot be ruled out that Prime Minister De Croo still wants to take action before 21 July.

A further reduction of BBSZ is accompanied by some annoying challenges. Firstly, against the tax relief of a few hundred million euros, a new search must be made for additional income from capital and consumption, which guarantees fireworks between the left and the right. The initial curtailment of BBSZ has also shown that PS and Ecolo want to focus the tax cut on the lowest wages so hard that a further promotion trap threatens to emerge.

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