Tax increases likely for seven Brussels municipalities

Seven municipalities in Brussels have yet to approve their budgets and tax increases seem inevitable, largely due to the successive indexations Belgium is experiencing, plus lingering effects of the pandemic. 

The social service centres (PCSW in French/OCMW in Dutch) in the city’s various municipalities are struggling to keep up with an increased number of disadvantaged families seeking aid, Le Soir reports, and raising taxes may be the only solution. 

All 19 entities in the capital are finding it increasingly difficult to balance their budgets, and the seven that have yet to approve theirs for 2022 are Etterbeek, Ganshoren, Forest, Ixelles, Saint-Gilles, Anderlecht and the City of Brussels.

Some are hoping to finalise the budget by the end of March, while others are targeting April. Molenbeek only just approved its own. 

At the beginning of last week, more than one out of two Brussels residents lived in a municipality running without a finalised budget. Many are operating with provisional legislation in the meantime, as they are required by law to present balanced budgets. 

“We withdrew three million euros and sold a piece of land for three million more. This is the last time we'll be able to make ends meet,” said Molenbeek’s mayor Catherine Moureaux (PS). 

It’s a similar situation in Etterbeek: “The OCMW had five million in reserves. We will empty them,” mayor Vincent De Wolf (MR) explained.

Others won’t be able to balance a budget as easily, including the City of Brussels: “Like many other municipalities, we are now putting ourselves on a budgetary trajectory for 2024 instead of looking for a balance at all costs,” said Brussels alderman for economic affairs Fabian Maingain (Défi). 

The city of Anderlecht said it still had to find €20 million out of a budget of €250 million: “These are very difficult times,” said mayor Fabrice Cumps (PS).

Indexation and pandemic weigh heavily on city wallets

The two main explanations are the indexation of municipal staff salaries in the face of inflation and the impact of the Covid-19 health crisis.

“You have two or even three indexations in a short period of time for municipal staff,” said Etterbeek’s Vincent De Wolf. “One indexation means more than two million euros. Then you add those for the OCMW and the police zone.”

Even without indexation, a revaluation of salaries for public servants saw an increase in the share of the budget dedicated to wages, as Brussels sought to bring compensation closer to Walloon and Flemish leves. 

The pandemic also took its toll on local finances, with Ganshoren’s budgetary deputy Stéphane Obeid (MR) explaining that it doubled the budget of their OCMW between 2019 and 2024: “It will increase from three to six million euros. This has a huge impact on a budget of €30 million.”

Brussels local authorities last year presented two reports on the cost of the pandemic at the local level, determining that by 2020 alone, the health crisis cost 41 million euros in lost revenue. 

Lastly, the economic crisis that accompanied the pandemic led to a drop in tax revenues, specifically when it came to property taxes and personal income tax.

Increasing taxes to fill the gap

To fill the budget gaps from the above factors, several municipalities have already increased their property tax in 2021. 

Others are trying to be creative, like Molenbeek, which has introduced a tax on automatic supermarket checkouts and film shoots. Anderlecht is considering a tax on large parcels of real estate and offices.

Municipalities will not be able to count on refinancing: on the contrary, the federal government is looking to make savings, and the region finds itself in a worrying financial situation. 

To ensure continuance of their essential tasks, many entities will have to raise taxes – if not now, then in the years to come. 

“We have never needed the municipalities so much,” said alderman of Saint-Gilles Jean Spinette (PS). 

“While the federal government and the region are running a huge deficit, we have to pull off a miracle and not run a deficit! There will be tax increases next year and we will have to make sure that we do not lose money.”