25th Oct 2016

Belgians face toughest tax burden in EU

  • Belgium has the highest tax rate on labour in the EU according to research. (Photo: Alan Cleaver)

Belgians are the highest taxed workers in the EU and will have to wait until August before they can pay off the taxman, according to research published on Tuesday (6 May).

The study by New Direction, a conservative think tank in Brussels, has calculated each EU country’s Tax Liberation Day - the calendar day on which a worker has paid off his tax burden and his wages start going into his own pocket.

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They did it by calculating a “real tax rate” which includes income tax, employee pension contributions and VAT.

Cypriot workers were the first to be shorn of their annual tax burden on 21 March, while people in 15 of the EU's 28 countries will be, theoretically, free from tax responsibilities in June.

But Belgians are the last, having to wait until 6 August. Despite hosting around 30,000 EU civil servants, who pay a “community tax rate” that is less than half that paid by locals, Belgium has held its position as the EU's most penal tax collector since 2011. An employer in Belgium spends €2.31 for every €1 it gives in take-home pay.

The research finds that the average real tax rate faced by European workers rose marginally from 45.1 percent last year to 45.3 percent in 2014.

However, the study reveals that countries which have a progressive tax system continue to have lower average tax rates than in countries with a flat income tax rate.

Some conservative and liberal governments have introduced flat-tax regimes in recent years, arguing that its low rates discourage avoidance by the rich.

The study does not take account of the quality or allocation of public spending across EU countries.

In a statement accompanying the report, co-author Cecile Philippe remarked that "tax rates have continued to increase in many countries, especially in France."

"Our states are simply doing too much, leaving less space for individual choice and responsibility. It is about time to rethink our model,” she said.

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