IMF on tax shift in Belgium

Tax policy. The tax policy measures of the government program contain a net reduction in labor taxes and a useful simplification of various social security abatement schemes, which should help limit unwanted distortions. At the same time we see scope for going further in tax reform. Income from capital is not taxed uniformly, and a more harmonized treatment would put the taxation of such income on a more equal footing with labor income. Property taxes could be rebalanced from transaction taxes to recurrent taxes on immovable property. This would stabilize tax collection and enhance labor mobility. We also see scope for reducing deviations from the standard VAT rate, e.g., for electricity, and to increase environmental taxes. Revenue gains from such reforms would be available to reduce labor taxes further.

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