Belgium taxes more than its neighbors … but remains heavily in debt: how did we get there? We explain to you

High debt but rich country – Belgium taxes more than its

The average of public debt in the euro zone amounts to 88 % of GDP. Furthermore, and that of the entire European Union at 81.8 %. Meanwhile, Belgium has far exceeded these averages. For example, with a level of debt stable at more than 100 % for several years, despite a slight increase of 0.2 points in one year.

Do you have trouble following? Consequently, To put it simply: Belgian debt does not torment. Meanwhile, but it does not back up either, unlike certain countries such as Ireland or Greece which, themselves, recorded significant reductions.

Here is the real amount of the federal state debt (the figure is enormous)

Very high taxation – Belgium taxes more than its

Besides that. Moreover, Belgium is one of the heavily taxed countries in Europe. Consequently, According to the belgium taxes more than its latest OECD report, the Belgian tax corner reaches 52.7 % for an isolated employee without children. Therefore, which means that more than half of the salary cost goes into contributions and taxes before arriving in the worker’s pocket.

Even if this figure varies according to profiles, the overall tax burden remains extremely high. Furthermore, Eurostat (still them) confirms that public revenues represent around 47 % of GDP, much more than the EU average.

Choosing a welfare state

So why are we more taxed than the others by ultimately having. Nevertheless, a higher debt than the others? Well, the answer is due in an term: the welfare state.

For several decades, Belgium has chosen a social model in which the State has played a central role. This model is based on strong redistribution. with clear budgetary priorities: most of the public revenues is devoted belgium taxes more than its to social protection, pensions, health care, unemployment or teaching. These positions alone represent a very large share of public spending.

Do you (still) find it difficult to follow? To make it short, the Belgians pay a lot, but they also receive a lot in return. Because this is where the Belgian model is distinguished.

But basically, what is public debt?

Public debt is simply the money that the public authorities borrowed to finance their expenses. It brings together the financial commitments contracted by the federal state, regions, municipalities, social security. It is used to fill the deficit when the revenues are not enough to cover expenses.

Contrary to has What you might think, this debt is not necessarily a problem in itself. As the National Bank of Belgium explains in its economic review. the real issue lies in the annual debt burden, that belgium taxes more than its is to say the interests that must be paid each year to borrow. The good news is that these charges have decreased sharply for thirty years. But beware, high debt makes public finances more sensitive to a possible rise in interest rates in the longer term.

Do you (again and always) have trouble following? In fact. when the debt is very high, it’s a bit like walking with a too heavy backpack: as long as the path is flat, it’s okay. But if interest rates go back. like a difficult slope, then each euro borrowed costs more, and it becomes much more difficult for the state to keep the pace without running out.

What if we cut in the expenses?

Reducing expenses is the classic reflex that is found in more liberal models to compensate for a high public debt. Canada or Sweden applied very belgium taxes more than its hard austerity policies in the 1990s, with real budgetary effects … but often at the cost of social tensions, massive layoffs and cuts in public services.

However, this method does not guarantee an effective reduction in debt. In the United States. for example, where social protection is much less developed than in Belgium, public debt exceeds 120 % of GDP … In reality. it is not the level of social expenditure that determines the level of debt, but rather the capacity of the State to mobilize revenue and to support growth.

Public debt or political debt?

Basically, debt is as much a political question as economic. But debt is not an uncontrollable monster. As the National Bank recalls, as long as GDP growth remains higher than interest rates, debt remains sustainable.

So why are we so indebted despite so many samples? Because we belgium taxes more than its have made the choice over time of a united model, costly, of course, but protective … The real challenge. today, may not be reimbursing at all costs, but to ensure that this debt remains at the service of the company.

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