Government finishes budget but remains divided on salary freeze

  • The 2014 budget painlessly reduces the deficit by 2.3 %.
  • Charges will be reduced.
  • A possible new salary freeze is proving divisive.

Another budget completed! After having freed up over €22 billion since coming into office, on Tuesday the government completed a new draft to the tune of €436 million. “We’ve also freed up €263 million to put measures in place to support the economy and consumers’ buying power,” said prime minister Elio Di Rupo during a press conference Tuesday evening. “If you add that to the measures taken in July, there will be a total of €1.1 billion for economic stimulus in 2014.” Here are the major points:

 

The budget. This budget is practically painless. Really. The only measure that might affect the average Belgian is a reduction in tax breaks for biofuels. “There are taxes that we didn’t want. That’s what happened with this one – it was forced on us by Europe,” said finance minister Koen Geens (CD&V). The tax will bring in €118 million. Other revenue increases are pain-free: there will be an upward adjustment of tax revenue forecasts (€109 million), supplemental revenue of €25 million from tax regularization, and an increase of €33 million in expected dividends from BNP Paribas Fortis. However, budgets are not just made up of new revenues. There are often reductions in public expenditures, and the 2014 budget is no exception. The government will economize on health care (€15 million), cooperation on development (€10 million), administrative expenses (€52 million), and the federal civil service (€100 million). Finally, there’s good news worth €98 million for the government: “The cost-of-living index level that triggers a rise in salaries will not be reached until June 2014, instead of May,” said budget minister Olivier Chastel (MR).

 

The prime minister concluded his discussion on the budget by confirming that Belgium will respect its European commitments. “We have honored our obligation with a 2.3 % reduction.” Work is still needed to find several billion euros in 2014 to balance the 2015 budget. But that can wait until after the elections.

 

The stimulus. The Di Rupo team has also taken measures to support the economy. “That’s the Belgian recipe,” Di Rupo commented. “A mix of budgetary savings, support for buying power and backing for business.” First, there is a new round of labor cost reductions. Those will total €95 million and will help SMEs, manufacturing, minimum wage workers and the hospitality and construction industries.

 

Independent businesses will be freed from contributions for management costs of family welfare. In addition, the government is supporting job creation with €49 million. “We will extend employer contribution reductions to the fourth and fifth jobs created by small businesses,” continued the prime minister. Currently, only the first three jobs created are eligible for this reduction. “For those companies that hire two additional workers that will represent a gain of €8,000 per year.” Another measure concerns young job-hunters. They can now take into account contribution reductions up until the age of 30, instead of the current age of 27. They can now participate after six months of unemployment, down from 12 months. The government will also allow SMEs to deduct investments when they do not benefit from notional interest. The final important measure: support for minimum wage workers’ buying power. They will receive a job bonus. “A minimum wage worker will receive an extra €10 a month,” social affairs minister Laurette Onkelinx (PS) specifies. “If you add that to the measures taken in July, someone earning €1,750 gross per month will receive an additional €260.”

 

BERNARD DEMONTY

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