Federal government passes budget
The federal government last week reached an agreement on its budget for 2013, based on a pay freeze for 2013 and 2014. Prime minister Elio Di Rupo promised the budget would help relaunch the economy and said his government had done everything “necessary and achievable” to spare the public.
Two-year pay freeze and energy prices are foundation of savings for 2013
Wages for two years, other than the minimum wage, will not be able to rise by more than the index, in an effort to reduce the margin, currently estimated at 5.2%, by which Belgian salaries exceed those in neighbouring countries. To preserve the purchasing power of lower incomes, meanwhile, an additional €30 million was agreed to give a tax credit to those on minimum wage, on top of €106 million agreed earlier in the year.
Also designed to tackle the cost of doing business and creating jobs, is a new stricter control on energy prices so that they, too, end up closer to the costs in neighbouring countries. And employers will see a cut in their contribution to employees’ social security payments. At the same time pensions, benefits and child allowance remain untouched.
“We have shown the will to find solutions in difficult circumstances,” Di Rupo said. “We are restoring the confidence of our citizens and entrepreneurs in the future. And we are reinforcing the confidence of the outside world in our country.”
The budget package represents savings of €3.9 billion, on top of savings of €14.5 billion made earlier, bringing the total to over €18 billion. According to various estimates, the pay freeze could cost anywhere between €250 and €500 a year for a household with both partners working and bringing in about €3,000 net a month.
The budget also includes a number of tax measures:
• an end to the tax on recycling
• an increase of the tax on the profits of shares and bonds, excluding the so-called Leterme bond, which remains at 15%. Savings accounts are not affected
• an increase in duty on tobacco and alcohol will add 20c to a pack of cigarettes and 4c to a bottle of wine
• a premium tax of 2% on life assurance policies, while mortgage insurance and pension funds remain untouched
• tax fraud prosecutions will no longer be limited in time, and sentences for serious cases will be increased from two to a maximum of five years
• an end to tax regularisation at the end of next year, which is expected to bring a one-off windfall of €513 million to treasury
In a joint statement, a group of employers’ organisations, including Unizo, Voka, the Farmers’ Union and the Federation of Belgian Enterprises said the budget measures were “insufficient” to relaunch the economy. While they were glad that the package keeps the economy on track to reduce the deficit next year to 2.15% of GDP, they said that the measures do not go far enough to restore the country’s competitive position.
The budget is “beyond a scandal”, according to the liberal union ACLVB, for the way it places a burden on workers and those on social security. Socialist union ABVV described the budget as more of a consolidation than a relaunch, “which goes too far in the direction of employers’ organisations”.