OECD welcomes Federal Government efforts to boost employment and competitiveness

The Federal Government was delighted with the encouraging remarks made by the OECD (Organisation for Economic Cooperation and Development), which, in its annual report, welcomed Belgium’s efforts to stabilise its budget primarily by reducing spending and not by raising taxes. To recap, the Federal Government’s measures should generate €11 billion over its entire legislative term. Of this €11 billion, €8 billion will come from savings alone. The other €3 billion is to come from new revenue, which will be channelled exclusively into economic recovery policies and measures to bolster purchasing power.

The OECD also highlighted Belgium’s problem in terms of competitiveness (higher labour force unit costs), but stressed that the Federal Government’s approach would go some way towards reducing this hindrance to our jobs and our economy. For instance, the temporary suspension of indexation (which would be offset in part by an increase in flat-rate expenses allowances) is a good means of tackling the wage handicap.

The OECD further recommended reducing labour taxes, which the Government will do from 2015 by increasing flat-rate expenses allowances.

The OECD suggested shifting some of the tax on labour onto consumption and capital. The Federal Government stressed that it prefers an approach geared towards reducing the overall tax burden. As such, it has opted for tax measures targeting income from sources other than labour and has also decided against a general VAT increase.

The Government intends to do everything it can to modernise our economy so as to guarantee financing for the social security system in the long term.