What to expect from Michel I?

136 days after the May 2014 elections, the federal government led by Charles Michel (Francophone Liberal) has finally been formed. The Flemish Nationalists (N-VA), the Flemish Christian Democrats (CD&V) and both the Flemish and Francophone Liberals (Open VLD and MR) came to a final agreement yesterday evening. The negotiators are expected to reveal their plans later today, but some details have already been leaked out. A quick summary of what to expect over the next five years.

New taxes

The coalition partners are opting for a so-called ‘see-through tax’. This means that everyone with investments abroad, will have to declare this and pay taxes accordingly.
Furthermore, people will have to pay higher value-added tax on online purchases and will be taxed on cosmetic surgery.
The diesel excise tax is also being adjusted.

One-off skipping of index hike

Belgian benefits and public sector wages increase by 2% when the retail price index rises by the same amount. The plan is to skip this operation once, which will be positive for corporations as they have to forego paying their employees higher wages.
This measure will not affect the lowest incomes and benefits.
To compensate, families will be granted a tax advantage of 250 euros.

Corporation tax

Corporation tax will be reduced from 33% to 25%, which will result in lower wage costs.

Unemployment

The long-term unemployed will be asked to do two half days of community service each week.
The lowest unemployment benefits will be raised.

Time credit

The so-called ‘time credit’, used by people who want to care for a young child, an elderly person or an ill family member is being extended by twelve months.
Taking ‘time credit’ to travel around the world, will not count towards your pension any longer.

Pensions

From 2025, the retirement age is being raised to 66, going up to 67 in 2030.
The lowest pensions will be raised and retirees will be allowed to supplement their income infinitely.

Retirement age for police officers

Transitional measures will be worked out for the police officers due to retire in the next coming years. The retirement age for police officers was recently raised to 62 and is widely protested.

Hospitality

The amount of allowed overtime for employees of pubs, restaurants and hotels, will be doubled from 180 to 360 hours a year.

Budget estimate

The budget will be in balance by 2018, two years later than the EU initially demanded. However, the new government is positive that this will not be an issue as they have opted for a lot of structural measures such as the skipping of the index hike and the raising of retirement age.