The Belgian government has agreed to a multi-year budget plan after months of negotiations, uncertainty and several missed deadlines.
However, the deal reached on Monday did not avert a planned three-day nationwide strike that began late Sunday night.
The five-party coalition reached a long-delayed budget deal after 20 hours of talks, fulfilling Prime Minister Bart de Weber’s promise to resolve the issue before Christmas.
“Today is labor, tomorrow is fruit,” Mr. de Wever wrote of X. “Only in this way can we secure a welfare state for the future.”
The federal deficit is expected to fall by €9.2 billion by 2029, thanks to higher taxes on certain products and services and cuts to government spending.
Belgium’s budget deficit will be 4.5% at the end of 2024, and the national debt will exceed 100% of GDP.
This violates EU rules that require member states to keep budget deficits below 3% and debt levels below 60% of GDP.
What does your budget plan look like?
One of the most controversial issues during the discussion was the potential increase in value-added tax, but ultimately the parties could not reach an agreement.
The final plan does not include any general value-added tax increases, except for some goods and services.
The entertainment sector will be particularly affected, with prices rising for activities such as hotel accommodations, grab-and-go meals and movie tickets.
Air tickets will be taxed at higher rates, online purchases from non-EU retailers such as Shein and Tem will be subject to parcel tax, and new taxes on banks will also be introduced.
Flemish public broadcaster VRT reported that while excise taxes on natural gas will rise, electricity will become cheaper.
The indexation system, in which wages rise in line with the rate of inflation, also became a major problem.
According to the Berga news agency, most employees will continue to receive the full wage sliding scale, but there will be a cap on the sliding scale for employees whose monthly pre-tax income exceeds 4,000 euros.
“We have been heard,” said Georges-Louis Bouchess, president of the center-right Reform Movement. The party is a leading figure in opposing the value-added tax hike and advocating for the continuation of the indexation system.
“There will be no increase in the VAT rate! “The shopping basket remains protected, the wage slide remains fully protected with social compensation, and tax reform is pushed forward,” he wrote to X.
VRT said the plan would require patients to pay additional co-pays at doctor’s visits, but the exact amount of the increase is not yet known.
The government also aims to bring 100,000 people currently on long-term sick leave back into the labor market.
At this time, it is unclear exactly when this measure will take effect.
According to the Brussels Times, reaction to the budget was mixed. The trade union ABVV criticized the deal, telling the media: “It will once again make huge amounts of wealth lighter, while imposing burdens on working and sick people.”
3 day national strike
Nationwide strikes were becoming larger and more frequent amid growing public dissatisfaction with the government’s fiscal plans aimed at addressing Belgium’s high national debt.
The current three-day strike, organized by the country’s three largest trade unions, is planned in response to the government’s proposed pension and labor market reforms and is being forced through despite a long-sought budget deal.
The train and public transport strike began late Sunday night and continued into Monday, disrupting many train, bus, subway and tram services.
On Tuesday, the strike will expand to the public sector, affecting schools and some public services. VRT reports that unions are considering the timing of the holiday season and disruption to the postal service is expected to be limited.
Wednesday marks the peak of the strike, with unions calling for a nationwide strike. Major disruptions are expected at both Brussels Zaventem and Charleroi airports.