Minister of Finance Johan Van Overtveldt addressed AmCham Belgium members at our New Year Reception on January 17, hosted by KBC Bank at their picturesque premises on the Grand Place. More than 140 guests attended, including a large number of representatives from the federal and regional governments, parliaments and administrations.
Against the backdrop of an eventful year, from the tragic events in Brussels to the changing geopolitical reality, the Minister highlighted in his keynote speech the need for the Government to get its priorities straight and focus on doing the right things. “We live in a world of growing economic uncertainty and geopolitical tensions. Protectionism is on the rise.” The controversies surrounding the Comprehensive Economic and Trade Agreement (CETA) and the Transatlantic Trade and Investment Partnership (TTIP) sadly reinforce this trend, whereas Belgium as an open and export-oriented economy would benefit greatly from such free trade agreements.
The need for Corporate Tax reform
Tax reform is high on Van Overtveldt’s agenda. Drawing from his recent visit to London, and conversations he had with Belgian and British entrepreneurs based there, the Minister re-emphasized the urgency to lower Belgium’s nominal corporate taxation rate (currently at 33.99%).
Many of Belgium’s neighboring countries and trade partners are already reducing their corporate tax rates or are planning to do so. The European Union, on the other hand, is questioning the relevance of specific tax deductions used by its member states to lower their own nominal corporate taxation rates, many of which are important to Belgium. “In order to safeguard our prosperity and employment, we should act quickly on a reform of the corporate income tax, as well as be very careful when introducing new taxes.”
Reducing public expenditure
“In a country where total government expenditure still amounts to 54% of GDP, adding new taxes is simply not a good idea.” Instead, in Van Overtveldt’s view, Belgium should aim at further reducing government expenditures to get back to a balanced budget and find the extra funding for essential reforms. The Minister shared an eye-opening calculation with the audience: “If the spending ratio would be reduced to the level achieved by our Dutch neighbors (45% of GDP), we could be spending €35 billion less.”
Brussels, a fintech platform
The Minister also praised London’s unique financial ecosystem, which harbors a global financial infrastructure, a large pool of talented personnel and an abundance of risk, or even risk-seeking, capital. Van Overtveldt expressed his belief that, even after Brexit, this ecosystem would not just simply relocate to other places. “London is and will remain the financial center of Europe for the foreseeable future or even somewhat longer.”
However, Brexit does present Belgium with the opportunity to “build bridges between London and Brussels, whereby Brussels could serve as a springboard.” Rather than engaging in an aggressive campaign to lure companies to Brussels, the focus should be on cooperation and exchange of know-how, as is the case with the newly launched collaborative fintech platform B-Hive. This approach should strengthen the position of Brussels as a financial center and gateway to Europe and help put Belgium on the map for investors.
AmCham Belgium would like to thank its members and sponsors for their involvement and support, and we look forward to a fruitful 2017 together!