De Croo throws pensions on the table when discussing tax reform

The federal core cabinet sat together until just after midnight on Sunday morning to discuss the proposal from Minister of Finance Vincent Van Peteghem (CD&V) to take the first steps towards a tax reform. Today, technical working groups are discussing the many bottlenecks that have resurfaced. The core cabinet will meet again tonight at 7 p.m.

Whether a deal is still in place in the early hours of Monday looks very uncertain. A government source testified to the Belga news agency last night about a good discussion. But according to the sources of De Tijd, the negotiations are going very difficult. On the left, only one culprit is indicated: the French-speaking liberals, who would continue to say ‘no’ to any proposal. The liberals, on the other hand, say that PS and Ecolo leave too little room to discuss the labor market measures that MR and Open VLD are asking for.

The negotiations thus begin to take on the air of a procession from Echternach. “So we are going to discuss the same thing again tonight as during the five previous meetings of the core cabinet,” a government source sighs.

The discussions are not so much about the reduction of taxes per se: all Vivaldi parties almost agree to reduce the costs of labor for the low and middle wages by about 2 billion euros through the abolition of the special contribution to social security (BBSZ). ) and spreading the work bonus.

It’s about funding that matters. The left-wing parties do not want linear VAT increases and mainly want the rich to contribute. “Actually, on the left, only Vooruit shows any opening to talk about VAT revenue,” says a source. Open VLD does not want to take measures that worsen employee pay packages – through the abolition of warrants – or discourage investments in start-ups. The Greens want to add a fiscal shift from electricity to gas – a carbon tax, so to speak. And the MR wants as little as possible. The party keeps repeating that the reform must consist of four equal parts. This means that half of the tax reduction will go to companies and that half of the financing will come from labor market measures. Which is taboo for PS and Ecolo.

A fairly hopeless situation and so Prime Minister Alexander De Croo (Open VLD) does something he has always refused: add a file, namely the pension reform. That is, however, a classic trick in negotiations: making the table bigger, so that there is something tasty for all parties. The coalition partners had also been asking for a package deal for months, but De Croo agreed so as not to make the discussions even more difficult.

So now it’s happening. And that’s not completely illogical. Time is seriously running out. Even more than with the tax reform, the federal government must come up with something by July 21 to prove to the European Commission that pensions will remain affordable for decades to come. That is the agreement that was made in the context of the European recovery fund, whereby the money promised to the member states can only be requested once a number of milestones have been reached. For our country, one of those milestones is a proper pension reform.

Although the federal government reached a pension deal last summer, the Planning Bureau and the European Commission considered it too light. Introducing a pension bonus would make pensions more expensive by 0.3 percent of GDP by 2040. The government agreed to do the homework again, but repeated proposals from pension minister Karine Lalieux (PS) did not convince the liberals and CD&V. They want a condition of effective employment added to early retirement and a weeding in the benefit systems of government employees.

The PS has been waiting annoyed for weeks for De Croo to put the file on the agenda. According to the party, Lalieux’s latest proposal goes beyond neutralizing the derailment. According to the party, it would lead to a reduction in the pension bill by 0.1 percent of GDP by 2040.

But CD&V Deputy Prime Minister Vincent Van Peteghem does not like the fact that she wants to touch on the second pension pillar in her proposal. The second pension pillar is a tax file, he believes. And so pensions and tax reform are indeed linked. Nevertheless, a government source calls the prime minister’s maneuver a desperate attempt.

De Tijd reported on Friday that there are no longer any major differences about one sensitive part of Van Peteghem’s proposal. Namely about the reform of the DBI deduction, an exemption from capital gains tax that companies that invest in other companies enjoy. After it emerged that Van Peteghem wanted to cut away no less than 750 million euros, the venture capital sector had come up against it. He received the support of Open VLD Deputy Prime Minister Vincent Van Quickenborne.

In concrete terms, it looks as if the favorable regime of the dividend-dbi bevek is about to be overhauled. DRD beveks are investment funds with which companies can invest indirectly in shares and which benefit from the DRD deduction. But the private privaks, which the venture capital industry uses to invest, would keep their FDI deduction.