Lowest net salaries have risen the most as a result of the tax shift

According to figures from the advice and audit bureau Deleoitte; those on the lowest salaries have seen their net earnings rise the most as a result of the Federal Government’s tax shift. Those with a gross salary of 25,000 euro have seen their net income increase by 3,000 euro/annum since the first of the tax shift measures started to take effect three years ago.     

These figures tally with predictions made by Deloitte in 2015 just after the Federal Government had announced its tax shift plans.

However, the tax shift has been a complete success. Due to revenue in other areas that income tax not having met expectations there is a revenue shortfall of 5.5 billion euro. 

Lowest versus highest

A person on 25,000 euro/annum gross (around 1,800 euro/month gross) that has two children now takes home 3,300 euro/annum more than they did three years ago. This equates to are 250 euro/month more take home pay.

A single person with no children on the same gross salary now takes home 1,150 euro/annum more than they did in 2015.

The tax shift has had far less effect on higher earners, those with gross earnings of more than 50,000 euro/annum.   For example, someone earning 125,000 euro/annum that is married with 2 children takes home 445.45 euro/annum more than they did before the tax shift measures were introduced.  

This is due to Belgium’s system of tax brackets. Earnings above a taxable income of 39,600 euro/annum are taxed at the highest rate of 53.5%.  

Purchasing power

A study released by the Catholic University of Leuven on Friday showed that despite the rise in fuel prices and other expenses purchasing power in Belgium has increased over the past few years.

The authors of the study say that purchasing power has risen by an average of 5.2% since the current Federal Government took office in 2014.  However, the richest have benefited the most with their purchasing power having gone up by between 5.7% and 6.8% since 2014. Meanwhile, those at the bottom of the earnings table have seen their purchasing power rise by just 3%.   

Lower social security payments for employers

The tax shift has not only benefitted employees. Employers to have benefitted from the measures that included a reduction in the amount of social security contribution they have to pay for their employees from 33% to 25% of the    

This made Belgium (after France) the second most expensive place to employ someone. The reduction in employers’ social security contribution means that Belgium is now the 6th most expensive after France, Sweden, Italy, Slovakia and the Czech Republic.   

Before 2015, a person earning 25,000 euro/annum gross would cost 33,171.70 euro/annum to employ. Now someone on the same salary costs their employer 31,387.93 euro/annum, which is 1783.77 euro/annum less.