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Belgium Urged To Pursue Lower Taxes On Labor

Thursday, February 6, 2020

Belgium should continue to pursue structural reforms to its tax, labor, and pension systems, a new report from the OECD recommends.

"Belgium has achieved steady economic growth and good levels of well-being, owing notably to past reforms," said OECD Secretary-General Angel Gurria, presenting the OECD Economy Survey of Belgium report in Brussels alongside Prime Minister Sophie Wilmes. "Boosting Belgium's growth will require maintaining the pace of structural reforms, while continuing with fiscal consolidation and close monitoring of the financial sector should enhance economic resilience to risks."

The report highlights that, despite recent increases, Belgium's 65 percent employment rate remains below the OECD average of 69 percent, and long-term joblessness is high, with 49 percent of unemployed out of work over a year. Further easing labour taxes on low earners could help less skilled, migrant, and older workers into employment, it recommends.

The Survey notes Belgium's progress in adapting social and tax policies to reflect the rise in non-standard employment, like platform jobs. It recommends building on this by harmonizing contribution rates and pension calculations between employees and the self-employed.

The report also proposes that Belgium could introduce congestion charges and remove tax incentives for company cars to relieve pressure on Belgium's roads and reduce congestion.

Overall, the report calls for the tax burden to be shifted away from labor. This should be achieved by higher environmental taxes and a broader VAT base, the report recommends.