Press release - 11-02-2021
Press release - 03-02-2021
Press release - 22-12-2020
Press release - 20-11-2020
Articles - 28-01-2021
Articles - 22-01-2021
Articles - 11-09-2020
The Federal Planning Bureau (FPB) is an independent public agency. It draws up studies and projections on economic, social and environmental policy issues and on the integration of these policies within a context of sustainable development.
Michel Saintrain is economist, deputy Head of the General Directorate and coordinator of the Public finances team. His research interests include, in particular, macro-fiscal issues, fiscal federalism and the sustainability of public finances.
The Ageing fund, which was set up in 2001 as an instrument to ensure the long-term sustainability of public finances, was abolished in 2016. Its abolition symbolises the transition from a strategy of pre-funding the budgetary cost of ageing, which dominated in the early 2000s, to a strategy based mainly on reforms to the socioeconomic model. The latter was initiated after the global financial crisis and has been firmly stepped up in recent years. This Planning Paper describes the economic and institutional factors behind the shift in sustainability policy, as well as the role of the various stakeholders: the governments of course, but also the High Council of Finance, the European authorities and the Federal Planning Bureau, which has produced long-term analyses and assessments over the past 25 years that have both reflected and helped to shape the pursued policy.
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.
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.
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.
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.
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.
The Working Paper looks at the strategy that has been implemented in Belgium since the beginning of the decade to finance the future increase in public spending due to population ageing. This strategy is laid down in the Stability Programmes and in the Ageing Act and is supported by a broad social and political consensus. It implies building up budget surpluses, which has not been done so far. The paper analyses the long-term effects of such a situation, for example as regards the trade-off between the various policies that could be implemented to face the budgetary challenges posed by ageing populations.