Economist Kevin Spiritus: ‘Belgian taxation is rotten with loopholes’

Spiritus defines a loophole as a way for someone, without good reason, to pay significantly less tax than other citizens who nevertheless earn the same amount: ‘That usually creates not only an issue of fairness, but also of economic inefficiency. It mostly comes down to who has been able to lobby politicians most effectively.’ This logic of lobbying, Spiritus argues, has led to a patchwork of exceptions that mainly benefit those who are well organised.

A prime example is the system of flexi-jobs: ‘This system makes absolutely no sense. In my view, it fits into a strategy of decay pursued by parties such as Open VLD: a high basic tax rate, but exemptions for everyone. It is the same as the annual debate about how many hours students may work without paying taxes. In the Netherlands that is unthinkable, students there work even more and simply pay taxes like everyone else.’

Spiritus also sees the planned capital gains tax derailing before it has even come into effect. The danger, he warns, is that fiscal ingenuity and creative constructions will completely undermine the intention behind it. ‘Tax advisers will certainly try things. Some are more aggressive than others. In the United States a capital gains tax already exists, and there we see shareholders on the stock exchange creating artificial losses in order to offset them against their profits. In Belgium this speculative strategy may result in a higher levy, but I have no doubt we will see other tricks emerge.’

The common thread in his analysis is damning: loopholes are not accidental flaws, but the result of deliberate political choices. According to Spiritus, they undermine both the fairness and the efficiency of the Belgian tax system, while at the same time fuelling the cynicism of citizens who do pay their taxes properly.