New leak shows how Arizona plans to slash social spending and save billions

New leak shows how Arizona plans to slash social spending and save billions
Credit: Belga / Siska Gremmelprez

A new leak from the Federal Government negotiations has exposed plans to tighten pension conditions and unemployment benefits in Belgium.

On Thursday, Le Soir published yet another leak of ongoing discussions between the prospective 'Arizona' coalition made up of N-VA, MR, Les Engagés, CD&V and Vooruit.

Arizona partners have until 31 January to form Belgium's next government. The five parties continue to clash over N-VA leader and federal formator Bart De Wever's socio-economic 'supernote' which aims to save €23 billion via reforms to pensions, taxation and the labour market.

"In the absence of major political changes, the financial viability of Belgian pensions is seriously threatened," the leaked section of the supernote states. Nothing is set in stone as the government agreement is still under negotiation.

Pensions: 'Harmonisation' and 'flexibility'

Arizona will implement a number of structural reforms that will allow for "harmonisation" and "flexibility" as a way to decrease social spending.

In practice, this means reducing pensions for people who retire early: by 2% until 2030, by 4% until 2040 and by 5% thereafter for those who retire early without 35 years of work. Those who retire late are rewarded by the same percentage every year.

In order to access a minimum pension, an individual must have worked at least 156 days per year for 30 years. Early retirement requires 234 working days per year for 42 years. A transitional measure will be introduced for people already approaching early retirement.

"Harmonisation" includes raising the retirement age for certain categories (SNCB workers from 55 to 56 and soldiers from 56 to 57, for example). Civil servants will no longer be able to add unused sick days onto their retirement.

Arizona also wants to introduce a "half-time" pension for individuals who wish to continue working and will get rid of compulsory retirement for statutory civil servants. The system in place for independent workers will also be reviewed.

No more ecocheques

Credit: Belga

The supernote aims to increase net salaries in order to "reduce the gap between work and inactivity to a gap of more than €500 net per month." Salary indexation will be maintained.

Salary tax will decrease, meal cheques will increase and ecocheques and culturecheques will be scrapped.

Tax reductions on unemployment benefits will also be discontinued. Aviation taxes will be increased, as will the the registration fees for obtaining Belgian nationality.

Employment benefits will be limited to two years but will not apply to people aged over 55. Young graduates are cut off after 156 days. The ban on Sunday work, night work and work on public holidays will be abolished.

Trade unions will continue to pay out unemployment benefits but will no longer be part of the public social security institution CAPAC committee.

Credit: Belga / Siska Gremmelprez

Tax the rich

The supernote states “it is necessary for the greatest fortunes and broadest shoulders to make a fair contribution to future prosperity by broadening the tax base in order to limit existing exemptions.”

With this in mind, Arizona will strengthen the fight against fiscal fraud and tax evasion, increase tax on investments above €1 million from 0.15% to 0.25% and introduce a general 5% tax on capital gains on financial assets (now called a 'solidarity contribution').

'This note lacks common sense'

Labour market and pension reforms are expected to save €5 billion. Future opposition parties Open VLD and Groen have expressed scepticism about the supernote's contents.

"The so-called solidarity contribution is a major tax increase disguised under a subtle marketing term," said Open VLD leader Eva De Bleeker. "It involves a new 5% tax on citizens wishing to invest, save and undertake business in our country, including employees receiving stock options from their employers."

Demonstrators walking on the Small Ring Road during a national demonstration on Monday 13 January 2025. Credit: Belga/ Hatim Kaghat

"Ordinary people already show more than enough solidarity," she continued. "This note lacks common sense that advocates for savings, reforms and lower taxes for those who work and undertake so everyone can benefit."

Groen leader Bart Dhondt countered that these plans target the most vulnerable in society while leaving the biggest polluters and richest individuals almost untouched.

"It is understandable that this proposal is unpalatable for Socialists and Christian democrats [Vooruit and CD&V are the Arizona partners against these measures, ed.]," he said.

Bilateral talks will reconvene on Friday and negotiations will continue over the weekend.

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