EYSKENS WANTS 102.1 BILLION FRANC BELGIAN TAX CUTS
Finance Minister Mark Eyskens is
proposing a package of personal income tax cuts worth 102.1
billion francs that would apply from 1989, a finance ministry
spokesman said.
    The package, one of 11 possible tax reform scenarios drawn
up by government officials, is expected to be discussed by
ministers in the coming weeks so that a government draft can be
presented to parliament in October.
    The proposals, which would greatly simplify the country's
tax system, include a cut in withholding tax on investment
income earned in Belgium to 20 pct from the current 25 pct.
    The reduction would apply to income from risk capital, but
the spokesman said this was likely to be defined to include all
shares and bonds.
    The package chosen by Eyskens is more favourable to
families with children than the present regime and would treat
spouses' incomes separately instead of combining them, a
practice that is widely seen as discouraging marriage. The tax
reform does not encompass corporate taxation.
    The spokesman said some 75 pct of the cost of the package
would be financed by changes to the 258 tax allowances
currently granted to diverse interest groups.
    A further 14 pct would be met by higher tax revenues
resulting from the overall macro-economic benefits of the
package.
    This would leave a shortfall of around 20 billion francs,
which the government would have to decide how to cover, either
by raising indirect taxes or by making further budgetary cuts.
    The package favoured by Eyskens, who has described Belgium
as a "fiscal Himalaya," is the least costly of the 11 scenarios
prepared. It envisages three marginal rates, or tax thresholds,
of 30 pct, 40 pct and 50 pct. This compares with 13 currently,
of which the highest is 71.6 pct.
 REUTER
