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Belgian Lawmakers Wave Through 2014 Budget

by Ulrika Lomas, Tax-News.com, Brussels

20 December 2013


The Belgian Chamber of Representatives has adopted the country's 2014 Budget, providing for a raft of fiscal stimulus measures totaling around EUR151m (USD166m), and designed to reduce the cost of labor and to increase purchasing power in Belgium.

Despite the positive vote in parliament, the New Flemish Alliance (N-VA), the French-speaking Democrats (FDF), and ecologist (Ecolo) parties opposed the Government's tax plans, insisting that the savings measures and additional levies would merely adversely affect the most vulnerable.

Belgium's 2014 Budget abolishes the bio fuel excise duty exemption, and provides for the issuance of pre-completed tax declarations, as well as for increased tax compliance as a means with which to generate new income. Tax regularization is also expected to yield additional revenues for the state.

Furthermore, the fiscal stimulus package reintroduces the investment tax deduction for small- and medium-sized companies (SMEs) for two years, lowers fiscal charges for SMEs electing to recruit a fourth and fifth member of staff, and reduces charges for overtime hours in the hotel and catering sector and in the construction industry. Finally, the legislation increases to 180 hours the number of overtime hours qualifying for wage withholding tax exemption.

Designed to reduce the structural deficit to 1.2 percent of gross domestic product (GDP) in 2014, Belgium's 2014 Budget is based on growth next year of 1.1 percent. The European Commission confirmed in November that the Budget is "broadly" in accordance with provisions contained in the Stability and Growth Pact.

Commenting, Belgian Budget Minister Olivier Chastel underscored that in less than two years the country is once again on the right track. The Minister nevertheless made clear that although the situation is improving, notably as a result of structural efforts, much work remains to be done. The Government intends to pursue its prudent fiscal policy and permanent monitoring of the budget, Chastel stressed.

Although lawmakers have now waved through the 2014 Budget, deep divisions within the Government are preventing progress on a number of envisaged reforms. The Government has so far failed to unite on a planned reform of the banking sector. Similarly, Finance Minister Koen Geens is struggling to push through plans for a reform of savings taxation in Belgium.

The Government is also due to hold talks shortly with the Belgian Regions, to finalize its economic stimulus package, taking into account regional recommendations. While Flanders is expected to put forward a plan to lower charges for businesses, Wallonia is eager to introduce measures aimed at boosting employment.

TAGS: compliance | Finance | tax | investment | business | European Commission | tax compliance | Belgium | fiscal policy | law | banking | budget | corporation tax | excise duty | legislation | withholding tax | tax breaks | tax reform | construction | individual income tax | Europe | Tax

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