What you see is not what you get: Taxes in Belgium are not that high
Perception often takes precedence over reality these days. In a series of articles, Belga English considers how Belgium is perceived and compares it with the facts. Today: yes, taxes are very high, especially on labour income, but there are many exceptions and escape routes.
According to OECD statistics, a single Belgian worker with no children is the most heavily taxed person in the world, and has been for years.
Income taxes, combined with contributions to the social security system, are the highest. The rates are progressive, but from even a modest level of income, the total charge is some three-quarters of all income above that level. And then there are the other taxes: capital gains, VAT, excise duties. Taxes for the national level, the regional level, provinces, cities and municipalities.
But these are only one part of the story. The other part is the many ways to reduce the tax you pay. There are illegal ways, of course, but also a large choice of legal routes.
For labour income, there are exceptions for different groups of workers. Students can work untaxed, up to 650 hours a year. The nearly untaxed system of flexi-jobs is open to pensioners and workers looking for an extra income. Employees with a high income can shift it from income taxes to the much lower capital taxes via a system of management companies.
Systems exist for many kinds of income and many kinds of companies. There’s even a word in Dutch for it: fiscale koterij. These “tax sheds” are built against the main tax building, a multitude of specific rules and exceptions to the advantage of particular groups in society.
This is not only unfair, but also detrimental to the economy. Decisions are based not on economic criteria but on tax rules. Everybody looks for the optimal shed for their situation.
Of course, many people are aware. And many are in favour of a major overhaul, a complete review of percentages and exceptions. But the tax sheds are always to the advantage of certain people, and those people lobby to keep their shed. And politicians are open to this lobbying.
As a result, most government efforts to make tax legislation fairer and simpler end up creating more sheds – meaning tax consultant is a future-proof job in Belgium.
© BELGA PHOTO THIERRY ROGE and HATIM KAGHAT
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