Ahead of 2024 elections, federal budget offers no major reforms

On Tuesday afternoon, Belgian prime minister Alexander De Croo presented his government's plans and budget for 2024 to the federal parliament. Just as with the regional governments, no painful reforms or major budget cuts have been decided. Eight months before the national and regional elections, this was not the time. Although many see an urgent need.

The Flemish and Walloon regional governments finalised their plans in recent days and weeks; Brussels has not yet completed its plan. The federal government reached a deal on Monday evening, just in time to give a live press conference at the start of the main news bulletins on the national TV channels.

The De Croo government intends to cut 1.2 billion euros through various measures. Only the commercial banks and the people who smoke will feel some pain, in the form of higher taxes. For many people and economic sectors, there’s good news. People on minimum wage will earn more. The system of flexi jobs will be expanded. These are side jobs for people who already have a job or are retired, with a very advantageous tax regime.

Traditional optimism

In his speech before parliament, De Croo, of Flemish liberal party Open VLD, stuck to his traditional line of optimism, saying the government does what it has to do. The budget deficit is reduced, people will see their prosperity increase and measures are being taken to protect the environment and climate.

Many experts and observers disagree. The decisions are too weak, they say. Most of all, they see the traditional Belgian way of solving problems. Instead of major changes and structural reform, governments settle for small solutions for the most urgent problems.

The best example is the tax burden. In Belgium, the tax burden is very high and very uneven. In theory, everybody has to pay a lot, when in reality there are many exceptions. Finance minister Vincent Van Peteghem of Flemish Christian democrats, CD&V presented a detailed plan some months ago for a structural change of the tax system. Although experts agree that plan was what is needed, the government failed to reach an agreement due to intense lobbying from various groups. As a result, the government has now decided to lower taxes for some, broadening the exceptions. And thus making the structural problem even bigger.

EU, please intervene

It is clear to many that Belgian politicians, at all levels, lack the power and courage to do what is necessary: bring the public finances back to sustainable numbers and reform socio-economic policies. The most hope lies with the EU and the European Commission. At EU level, budget discipline was no longer a priority, because of Covid and the energy crisis. But now, there’s a consensus growing that more discipline and more reforms are necessary. Member states that refuse to do what is necessary will feel the pressure from the Commission. Sanctions haven’t been ruled out.

This European sword of Damocles worked in the 1990s, when Belgium was in even deeper problems. With the complex Belgian institutional context and the competition between the many, small political parties, this might well be the solution again.




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