Belgium tax cheating spurs reform debate
A rash of tax-fraud investigations and convictions involving, among others, a former prime minister, has triggered a bitter debate in Belgium over reforming the country's burdensome tax system. Prime Minister Wilfried Martens has promised to look into revamping the system as early as next year. But the squaring-off over the issue in a country where the top income tax rate is 72 percent -- the highest in Western Europe -- has already begun.
The debate came to a head recently when a Brussels court found former Prime Minister Paul Vanden Boeynants guilty on many of the 137 counts of fiscal fraud and forgery brought against him. (Mr. Vanden Boeynants headed Belgian governments twice in his long and flamboyant political career -- once in the 1960s and again in the late 1970s.)
Because of services he rendered to the country, the judge said, Vanden Boeynants was given only a three-year suspended jail term and a $16,000 fine.
Commentators here concede this case is unique. But no one doubts the symbolic significance of uncovering tax cheating at the highest levels of Belgian society.
``Almost everyone does it, just to survive,'' says a young Belgian fashion designer who claims that if he had not cheated tax authorities, he would have been forced into bankruptcy long ago.
His views echo those of many of his countrymen, including Prof. Pierre Pestieau, a political economist at the University of Li`ege, who says that ``in many circles fiscal fraud is considered a national sport.''
Professor Pestieau, who has devoted a good part of his career to studying the phenomenon, concluded recently that about 10 percent of the Belgian labor force -- or about 300,000 people -- spend 10 or more hours a week ``moonlighting'' in order to avoid taxation.
Over the years, Belgian governments have raised taxes almost without mercy in an effort to replenish the ever-hungry till of one of Europe's model welfare states. And the government generally opposes cutting taxes now because its new program to reduce the massive federal budget deficit by slashing public expenditures has only just begun to take hold.
Belgian authorities have also cracked down particularly hard on tax dodgers in recent years. Recent cases have demonstrated the effectiveness of the Belgian authorities in tracking down tax evaders. They have also been instrumental in persuading Prime Minister Martens, under pressure from the Liberal Party, to draft a so-called ``taxpayers' charter.'' Its aim is to curb the powers of the government in tax-related cases. It will be issued sometime in the next few months.
Long before the current uproar over tax fraud, the Liberal Party -- a self-styled champion of individual freedom -- had been campaigning vigorously for the government to limit the powers of the state tax authorities. Critics of the Liberal Party's initiative, however, have warned that the taxpayers' charter would tend to encourage would-be cheaters to travel down the path of lawlessness.