This study presents a compact model that allows a stylised, yet dynamic reasoning on the main macrofiscal aggregates that are relevant for setting budgetary paths compatible with the structural budget balance requirements of the preventive arm of the Stability and Growth Pact. Some lessons on the conduct of fiscal policy in a reference framework in structural terms can be learned from the simulations provided for illustrative purposes. These simulations show in particular that – under certain conditions relating to the degree to which the budgetary adjustments have a permanent effect on the economic activity and thus on potential GDP – when the feedback effects of adjustments on the underlying macroeconomic environment are left out of consideration, this can be detrimental to the credibility of the considered structural paths.
Working Paper 05-17 [30/05/2017]
Within the framework of the sixth state reform, part of the personal income tax has been regionalised. What’s more, in ESA2010, certain tax expenditures which were partly recorded as negative revenue in ESA95 are now recorded as general government expenditure. These changes motivate a revision of the personal income tax model which is used both for the short and medium term projections made by the FPB and for variant analyses. The new model makes a distinction between the “prepayment” tax (payroll tax and advance payments) and the “enrolment” tax (which fixes the amounts due under regional and local additional levies). It provides a better link to the macroeconomy and explicitly takes into account the schedule of tax enrolment.
Working Paper 04-16 [24/03/2016]
This study presents a method for decomposing the annual variation of the debt ratio among the cyclical, structural and one-off components, thus making it possible to identify the structural conditions for a positive or negative snowball effect. The study shows that the cyclical component may be significant and, depending on the year, partially hide the structural component of the endogenous debt development. The method differs from the European Commission method for estimating a cyclically-adjusted debt. Compared with it, our method estimates a cyclical component that is better correlated with the level and variation of the output gap. Finally, the study discusses the advisability and feasibility of taking into account equilibrium inflation and interest rate in the approach.
Working Paper 08-15 [30/10/2015]
- Economic outlook 2015-2020 [12/05/2015]
- Economic outlook 2015-2020 0 [19/03/2015]
The state reform was elaborated at a moment when large fiscal consolidation measures were required to restore the long-term sustainability of Belgian public finances. The 2011 institutional agreement provided that the federated entities contribute, through the reform, to the fiscal consolidation. That contribution can be justified by the fact that the reform, by reducing the budgetary size of the federal level, decreases the federal level’s room for manoeuvre and its capacity to resolve on its own the sustainability issue. The magnitude of the contribution necessary to prevent the sustainability challenge from deteriorating is assessed and compared to the redistribution of the public deficit as organized by the reform. The assessment is made in a constant policy scenario and for different assumptions about the reform's life span. This study shows that the transfer of fiscal burden to the federated entities is, a priori, sufficient not to aggravate the sustainability problem considering the reduced size of the federal level’s budget. The federated entities have gained scale and powers but will have to contribute substantially to the efforts to restore fiscal sustainability.
Working Paper 01-14 [10/01/2014]
- SP131121_01 [21/11/2013]
- OPHERMREG1302 [04/07/2013]
- OPHERMREG1201 [16/07/2012]
- Economic outlook 2012-2017 [14/05/2012]
This Working Paper discusses the elasticity and the progressivity of personal income tax. Both concepts deal with the same object but from a different perspective: elasticity has a temporal angle, whereas progressivity has a cross-sectional angle. Progressivity is here estimated based on the distribution statistics of taxable income and taxes. In addition, a method is introduced to assess the negative relationship between progressivity and income growth. In retrospect, that relationship contributes to explain the evolution of progressivity during the past decades. Looking ahead, it can be used to project – under an unchanged policies assumption – an evolution of elasticity different from the constant elasticity hypothesis, typical of short- and medium-term models, and from the unitary elasticity hypothesis, typical of long-term models. In this context, the impact of the larger share of pensions in the tax base on progressivity is taken into account. This Working Paper also discusses the regionalization of personal income tax approved within the framework of the Institutional Agreement for the sixth Reform of the State of 2011. More specifically, it demonstrates how the treatment of elements from the tax system with a fixed dimension (zero tax bracket, tax relief) and elements with a progressive dimension (income scale) influences the specific elasticity of the regional and the federal tax shares in personal income tax.
Working Paper 01-12 [15/03/2012]
- OPHERMREG1101 [22/06/2011]
- Economic outlook 2011-2016 [12/05/2011]
- OPHERMREG1001 [09/07/2010]
- Economic outlook 2010-2015 [19/05/2010]