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Belgium public debt tops 100% of GDP, more tax rates on wealthy to boost competitiveness

Belgium public debt tops 100% of GDP, more tax rates on wealthy to boost competitiveness

BRUSSELS: The OECD economic survey of Belgium 2015 noted that public debt now topped 100% of gross domestic product, adding that public finances would become unsustainable without further fiscal consolidation.

Belgium has been advised to constrain public spending and raise tax rates on the wealthy to boost employment and competitiveness, following a return to economic growth.

In a report today, the Organisation for Economic Cooperation and Development said that, while the European country had returned to growth and reduced budget deficits, structural reforms were needed to support growth.

It identified considerable scope for reform, as public spending was high, particularly on pensions. The OECD also pointed out that Belgium relies on revenue from social contributions and personal income taxes, which weakens growth and employment.

It urged the government to raise the legal pension age and restrict other routes for early retirement to enhance long-run debt sustainability.

The country’s international competitiveness should be addressed through labour market reforms. In particular, Belgium should look towards reducing labour taxes to boost employment, while the lost revenue could be compensated through increases to taxes that are less harmful to growth, such as those on consumption and the environment, the survey said.