Tax policy: New directions

Résumé 0

Tax policy has played a significant role in the parliamentary term that is now coming to an end. At the federal level, the two main tax reforms were the tax shift and the corporate income tax reform. The first was an integral part of the coalition agreement, while the second was not. The CIT reform was clearly driven by changes that occurred at the international level: the BEPS agreement that was concluded in 2015 at the level of the OECD and the G20, and the subsequent EU Directives. The tax shift aims to move taxation from labor to consumption and capital, with a focus on the lower range of wage distribution. The shift is only partial, making the macroeconomic consequences positive. The effect on redistribution is not clear-cut. Cutting PIT and increasing indirect taxes has an adverse effect on redistribution, while the shift towards taxation of capital and the effects of the labor supply should have the opposite effect. The CIT reform is typically a “broad base-low rate” reform, which is a clear change to Belgium’s tax policy stance. At the regional level, tax expenditures have been cut in the three regions, and a broader reform took place in the Brussels-Capital Region, with an additional tax shift from the taxation of earned income to the taxation of property. A large scope for reform is still open at the federal level, including broadening the tax base, a more uniform taxation of savings, and a greater use of environmental taxation. JEL Codes: H2, H23, H24, H25