The federal coalition agreement that was signed two weeks ago contains measures designed to ensure that some of the discrimination that currently exists between single people and those that are married or are legally cohabiting is done away with. However, the fiscal expert Michel Maus says that this is not the big step forward that some might have hoped for.
According to the federal statistics bureau Statbel, on 1 January 2024 more than 36% of households in Belgium were made up of just one person. In addition to one-person households, a further 10% of households were made up of one adult with children.
Meanwhile, there is no other country in the world in which single people are taxed more than here in Belgium. This is most certainly the case among single people that don’t have children. But will the new federal government’s plans really make a difference and will singles be better off than is currently the case?
Equality
The coalition agreement says that the federal government recognises the diversity in the way in which people in our society are cohabiting and is striving for an approach that takes this into account and treats different forms of (co)habitation as equally as possible.
For instance, by 2029 the married couples’ quotient will be halved for those that have not yet retired. Under the married couples’ quotient, taxes are calculated more advantageously for a couple where one of the partners has a low income or no income at all. For pensioners, the government will let the system “fade out” over a “sufficiently long period”.
While this will eliminate a tax break for married couples and those that are legally cohabiting couples and provide additional revenue for the state, it will not benefit single people as such.
Tax-free sum
The federal government wants people in work’s take-home pay to increase. To this end, the amount people can earn that is free of tax will increase and the 'Special Social Security Contribution’ (BBSZ) will be reduced and reformed. This is something that will (also) benefit single people.
Furthermore, the additional tax-free sum that applies to single parents will by the end of the legislature only be given to people that are really single and not those that are cohabiting. How much extra net income people will receive depends on a number of factors. However, single people will benefit the most from the changes.
According to calculations made by the Flemish Christian democrat party the measures will see the median take-home pay of a single person increase by 1,200 euro/annum. For a couple this will be 1,900 euro/annum between them by 2029.
However, little if anything will be noticeable during the first years of the legislature. Furthermore, there is some ambiguity about the figures. The fiscal expert Michel Maus questions the Flemish Christian democrat’s calculations concerning single people. “Where these figures come from is unclear to me. The increase in the tax-free allowance applies to all working people, couples and singles.”
Michel Maus goes on to say that it's a good thing that the gap between singles and couples is narrowing “but the problem obviously is bigger than that”.
“The tax burden on labour is the big issue in our taxation system. Noone, nowhere is taxed more heavily than a single person without children in Belgium. It is a different story if you have children. This has to do with the tax-free allowance for dependent children, which increases for each child.
The coalition agreement says they want to go to a fixed amount per child, but it still vague."
“I think that everyone understands that there are tax incentives for children, but the question is whether it would not be desirable to grant more tax-free allowance for everyone”, Michel Maus concludes.
"Limitted changes"
The Ghent University (UGent) professor of economics Bart Chiau told VRT News that the changes are “limited”.
“As I read it, more benefits are being taken away for married couples and those legally cohabitating than benefits are being added for singles”.
“From a social point of view the issues mainly concern single-parent families. Research shows that they are more likely to end up living in poverty. This is why the additional tax-free allowance is only applied to single people with dependent children. The aim is to deny it those that are de facto cohabiting. Singles without children pay a lot of taxes but are less likely to end up living in poverty”, Professor Chiau said.