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The Belgium government has agreed a multi-year budget plan, following months of negotiations, uncertainty and several missed deadlines.
The deal that was reached on Monday, however, did not avert the planned three-day nationwide strike that started late on Sunday evening.
The five-party coalition reached the long-delayed budget agreement after 20 hours of talks, meeting Prime Minister Bart de Wever’s pledge to resolve the issue before Christmas.
“Today the labor, tomorrow the fruit,” de Wever wrote on X. “Only in this way do we secure our welfare state for the future.”
Tax hikes on certain products and services, and cuts in government spending are expected to lower the federal deficit by €9.2 billion by 2029.
Belgium’s budget deficit stood at 4.5% at the end of 2024, with national debt exceeding 100% of GDP.
This breaches EU rules, which require member states to keep its budget deficit below 3% and debt levels under 60% of GDP.
What does the budget plan look like?
One of the most contentious issues on the table was a potential VAT increase, which parties ended up failing to agree on.
In the final plan, there will be no general VAT hike, except for certain products and services.
The entertainment sector will be particularly affected, with prices going up for activities including hotel stays, takeaway meals and cinema tickets.
Airline tickets will also be taxed at a higher rate, a parcel tax will apply to online purchases from non-EU retailers like Shein and Temu, and a new tax on banks will be introduced.
Excise duties on natural gas will rise, Flemish public service broadcaster VRT reported, while electricity will become cheaper.
Indexation, which sees wages increase in line with inflation, was another major sticking point.
According to the press agency Belga, most employees will continue to receive full wage indexation, while those earning more than €4,000 per month before tax will see their indexation capped.
“We have been listened to,” said the centre-right Reformist Movement’s President Georges-Louis Bouchez, whose party had been the leading voice opposing VAT increases and advocating for the continuation of indexation.
“There will be no increase in VAT rates! “The shopping basket is protected, wage indexation remains fully protected with a social correction, and the tax ıslahat is being pushed forward,” he wrote on X.
Under the plan, patients will now also have to hisse more out of their own pocket when visiting a doctor, although the exact amount of the increase remains unclear, according to VRT.
The government also aims to reintegrate 100,00 people currently on long-term sick leave back into the labour market.
It is currently unknown when exactly the measures will be implemented.
Reactions to the budget plan were mixed, according to The Brussels Times. Trade union ABVV criticised the agreement, telling the outlet that it “places the burden on those who work and are ill, while large fortunes evvel again get off lightly”.
Three-day nationwide strike
Nationwide strikes had been growing bigger and more frequent as public frustration grew over the government’s fiscal plans aimed at tackling Belgium’s high national debt.
The current three-day strike, organised by the country’s three largest trade unions, had been planned in response to the government’s proposed pension and labour market reforms, and is going ahead despite the long-sought budget deal.
Trains and public transport started striking late on Sunday evening and continued throughout Monday, with a number of trains, buses, metro and tram services disrupted.
On Tuesday, the strike will expand to the public sector, affecting schools and certain public services. Postal services are expected to experience only limited disruptions, as unions considered the timing of the holiday season, VRT reported.
Wednesday will mark the peak of the strike, with unions calling for a nationwide strike. Major disruptions are expected at both Brussels Zaventem Airport and Charleroi Airport.
Quoted from Euronews.
