Commission tells Belgium to cut taxes

The European Commission has urged the Belgian government to cut its high taxes, saying they act as a disincentive to investment and job creation.

In its economic guidelines for member states, issued on Wednesday, it said that while some progress had been made towards a comprehensive tax reform, the system was still characterised by a high overall burden.

“The tax burden is heavily skewed towards labour. This results in high labour costs, which discourage job creation, and large tax wedges, which contribute to remaining unemployment traps. Certain features of the tax system are environmentally harmful,” the Commission said. 

“Shortcomings are related to labour taxation and financial disincentives, educational outcomes and qualification mismatches, the wage-setting system, labour shortages, and old-age social security systems. Both young and elderly workers face important barriers to entry. People from migrant backgrounds are in a particularly precarious position.”

These recommendations are, however, in line with prime minister Charles Michel's efforts to shift tax from labour to other sources of income like environmental or capital gains taxes.

Pierre Moscovici, the EU Commissioner for economic and financial affairs, taxation and customs, also noted that while high debt levels remain a particular concern in some EU member states, there were relevant factors that justified the breach of the debt and the deficit threshold for Belgium, so it was not necessary to open an Excessive Deficit Procedure.