2022 tax reform: a fools' ball?
On Tuesday 5 July, the experts delivered the draft tax reform envisaged by the Belgian government from 2022. This reform provides for radical changes to our tax system. Reading it, one may wonder whether this bill is being drawn up for the benefit of Belgian citizens or on behalf of international bodies without any democratic legitimacy.
Reading the report leaves a troubling impression. Among other things, one can read “Rather than acting piecemeal, the time seems to have come to rebuild the system” and “there is no doubt that revolutionary possibilities exist” [1]. Phrases that smack of Klaus Schwab's “Great Reset”[2].
So what are these ideas of revolution and rebuilding the system that drive our tax experts? The recommendations come mainly from international bodies such as the European Commission, the OECD and the IMF[3] – recommendations that are in English in the original text. And what do these institutions recommend for our money?
What do the international institutions recommend for Belgians?
The European Commission recommends, among other things, abolishing heating allowances so as not to “encourage the use of fossil fuels such as gas for heating”[4]. The fact that there are no other alternatives does not seem to be a concern for the European Commission.
The OECD, for its part, recommends in particular introducing a recurrent tax on home ownership, whether for living in or for letting, but also increasing the basis for calculating this property tax in order to “reflect the market”[5]. The stated aim is to allow, on the other hand, a reduction in the taxation of labour. Not to increase our purchasing power, since we will have a whole series of new charges to pay, but to “encourage” people into work. So we are going to have to work more in order to be able to pay more taxes and more charges.
Indeed, the IMF recommends, word for word, abolishing all fringe benefits, in particular to “abolish the advantageous schemes for company cars”[6], but also abolishing all tax exemptions, in particular the one on pension savings[7]. The institution also specifically recommends that Belgium increase the amounts of VAT actually paid by consumers, by abolishing all reduced rates and exemptions[8]. Like the OECD, it recommends taxing people who own their home or let a property[9].
Does the Belgian government plan to defend our interests?
Clearly, the Belgian government plans to follow the recommendations of the OECD and the IMF despite Belgians' possible opposition to the measures proposed by these institutions without democratic legitimacy. In particular, the Belgian government does indeed plan to introduce the taxation of rental income. This would be a radical change that had already been considered, but never seriously, so obvious is it that it risks bringing down the whole Belgian property sector, which is nonetheless an essential cog in our economy. Belgians do indeed have “a brick in their belly”[10].
Will the next crisis, which is already approaching very fast given the international situation, be used to push through an unpopular measure? In doing so, they would merely be applying a modus operandi already tested in the health and security spheres during the covid crisis. Indeed, Klaus Schwab, the founder of the Davos Forum, sees in it “a rare but narrow window of opportunity to reflect, reimagine and reset our world” [11]. Everything suggests that the next crisis will be the opportunity to revolutionise and “rebuild the system” of taxation. The enthusiastic presence of “Young Global Leader” Alexander De Croo at Davos Forum events[12] is hardly reassuring as to the influences and intentions of our prime minister.
Democracy, a dispensable obstacle
One thing is certain: if this tax plan were to be put into practice, it would not be a great victory for democracy. The authors of the reform do not hide their concern about resistance from part of the population, particularly concerning the taxation of housing: “Today, the exemption for one's own home is socially rooted. It is therefore not easy to call it into question”[13]. The elected representatives seem more concerned with forcing through the measures recommended by the IMF than with the interests of their voters.
The same is true of the taxation of savings: “Abolishing the exemption for savings deposits will probably meet with some resistance. There are nevertheless compelling reasons to actually abolish it”[14]. Our elected government therefore plans to put in place the measures recommended by unelected international institutions, while being perfectly aware that we do not support these measures. Our government will then find it easy to hide behind respect for international agreements, or will argue that other countries have already applied it… A fine lesson in democracy!
Further on in the report, one can also read this: “Such an approach nevertheless seems unrealistic and is likely to come up against strong social resistance”[15]. Our representatives are clearly aware that the citizens who elected them would not agree with the introduction of a new “revolutionary” taxation based on the recommendations of international coteries without any democratic legitimacy. Once again, what holds our representatives back is not respect for the democratic mandate they have received from us, but solely the prospect that if, as they would like to, they put in place measures that too openly harm our interests, we might oppose them.
Measures designed to fleece citizens?
As for reducing VAT, the report does not beat about the bush and advocates, purely and simply, the lifting of all reduced rates in order to standardise VAT at 21% on all products and services, seeking with remarkable cynicism to improve “the ratio between the VAT actually collected and the VAT theoretically collectable”[16]. Does this reflect the wishes of citizens?
The text generally provides for the repeal of all tax exemptions and all auxiliary schemes such as “copyright, flat-rate allowances for artists, flexi-jobs, overtime in the hotel and catering sector, the collaborative economy, association work, casual work in the HORECA sector, and the special schemes for sportspeople, referees and coaches”[17]. Everyone will have to pay the maximum possible! Does this reform reflect any social consultation whatsoever?
Or is this reform the first step towards one of the prospects of the Davos Forum's 2030 agenda, “you'll own nothing and you'll be happy”[18]? In a truly democratic system, how could such a “reform” even be contemplated?
Nicolas Mertens, citizen journalist for BAM!
[1] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022, p133
[2] K Schwab, COVID-19: The Great Reset, Forum Publishing 2020
[3] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022, p24 à 30
[4] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022, p29
[5] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022, p24
[6] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022, p29
[7] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022, p28
[8] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022 p24-25
[9] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022, p24-25
[10] Le Belge a encore une brique dans le ventre mais… (enquête) - L’Avenir
[11] K Schwab, COVID-19: The Great Reset, Forum Publishing 2020
[13] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022 p113
[14] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022 p117
[15] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022 p120
[16] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022 p127
[17] Mark Delanote Note de vision générale concernant la réforme fiscale plus large, FPS Finance, June 2022 p78
[18] Welcome To 2030: I Own Nothing, Have No Privacy And Life Has Never Been Better
Photo source:
Image resized from the original image by Garry Davies on flickr, CC BY-NC-ND 2.0