BRUSSELS: The International Monetary Fund (IMF) has commended Belgium for its efforts to reduce the labor tax wedge and encouraged further efforts to reduce the wedge for the low-skilled and strengthen incentives toward active labor market participation.
In its 2016 Article IV consultation report for the country, the Fund noted that Belgium plans to reduce the employers’ social security contribution (SSC) gradually from 33 percent to 25 percent in 2019 in order to address some of the effects related to its high and – until recently – rapidly increasing labor costs. The measure is targeted at those with lower salaries, whose contribution rates will be reduced over-proportionally. The measure could significantly stimulate employment rates among vulnerable groups, the report said.
The IMF recommended more efficient taxation of wealth, including by introducing a broader capital gains tax, shifting real estate taxes from transactions to recurring charges, and limiting the favorable tax treatment of rental income.
It also said that strengthening environmental charges further and eliminating generous fiscal incentives for company cars would have both environmental and fiscal benefits.
In addition, the report said that there is scope for improving the efficiency of the value-added tax (VAT) regime.
