Study shows Belgium is one of Europe’s most-taxed countries

Belgium remains one of the highest-taxed countries in Europe with single childless citizens footing the highest tax bills, according to the latest OECD study. 

Single workers without children in Belgium, who are paid a median wage (€3,486 gross), see almost 52.3% of their earnings deducted for taxes.

This leaves a net salary of €1,674 after taxes, although the calculation can vary depending on factors such as indexation and other benefits, reports RTBF.

The tax rate was significantly lower in the other European countries OECD examined, with an average rate of 41.3% compared to Belgium’s 52.3%. 

However, researchers point out that median salaries differ from one European country to another.

Single people in Belgium without children earning a higher salary (167% of the median) see 59% of their salary go to taxes, a rate that decreases to 46% for those earning 67% of the median. 

Couples with children are at an advantage

But while couples with children are taxed at a lower rate, this still remains higher than the European average (for OECD countries) at 45.2%.

For couples with one average income and two children, the rate is 37.2%, which is better than five other countries when it comes to this category. 

Single parents of two children, even when earning just two thirds of the median salary, are still taxed at 29.35% – the second highest rate for this category after Sweden (32.4%).

“The progressivity of the tax increases quickly, even for people with low incomes,” said UCLouvain law professor Edoardo Traversa. 

“When you don't benefit from a special programme or special deductions, you are heavily taxed.” Having dependents, whether children or elderly parents, can lower the tax burden. 

Wage taxation has generally been declining

The OECD data also revealed that overall wage taxation has been falling over the last 20 years. 

“Taxation on labour was introduced in the 1960s when there was full employment: wages were going up and up, so the government was taxing more. People didn't realise how much taxes were increasing,” Traversa explained.

“Today, wages are stagnant and despite indexation, the tax rate on wages is very high. This is why some governments have made the political choice to reduce the wage tax in recent years. It’s good news that wage taxation is decreasing in Europe because wages are increasing less than other forms of income.”

But as wages fall, gross pay is not rising as much as it used to. A worker's salary has stagnated since the 1980s, while GDP and inflation have both risen, resulting in a decline of purchasing power. 

“Today, the elderly are those who have the least chance of falling into poverty, unlike the young, and yet it’s the young who often pay more income tax,” the report found.

“Several options are on the table to correct the balance, such as an increase in taxes on consumption, taxes on wealth or corporate taxes. But all this will depend on the political choices that may or may not be made in the future.”

Photo: © Belga/Jonas Hamers © ImageGlobe