< Back to previous page

Publication

Research into shifting taxes on labour to the environment

Book - Report

International institutions such as the European Commission and the OECD have on a number of occasions drawn attention to the unbalanced tax regime in our country. Our tax system places a relatively heavy burden on labour, while other areas, such as capital, consumption or environmentally polluting activities, are relatively little used. The Federal Government has therefore taken steps to achieve a tax shift that should relieve the burden on labour by using other sources of income. A shift in the burden from labour to environmentally polluting activities fits in with this evolution and is in line with the 'polluter pays' principle. It also provides incentives for the greening of the economy, which is one of the objectives set out in the Flemish Coalition Agreement for the period 2014-2019.

In this study, we look at the potential for reducing labour taxes - taking into account the Flemish competences. This applies both to the individual (redistributive effects) and to the broader Flemish economy. Many studies point to the potential of a reduction in labour costs as a stimulus to employment. In this case, there may be a 'double dividend'; this is a situation in which there is both a positive effect on the environment and on the economy.
This study then examines how this reduction can be financed by increasing the burden on environmentally polluting activities, so that the final story is budget neutral.

The second chapter gives an overview of the existing taxes in Belgium/Flanders. In chapter three, we look at the results of four possible tax reforms that fall under the Flemish competences, with a particular focus on the distributive effects - and thus the individual. Chapter 4, on the other hand, analyses the broader economic effects (the possible payback effects for the government). In chapter five, we will briefly discuss possible green sources of income that should make it possible to reduce taxes on labour. This quickly shows that road pricing is the ideal candidate. For this reason, we will examine the modalities and potential of this measure in more detail in chapter six. Chapter seven concludes with an elaboration of the broader economic effects of road pricing and the conclusions that can be drawn for policy.
Number of pages: 65
Publication year:2019
Accessibility:Open