Belgium world champion in taxes for singles and families with children

Nowhere in the industrialized world is labor taxed as heavily as in Belgium. A new OECD report reaffirms that champion status. All political movements promise improvement in their election manifestos.

Not a single Flemish party does not want to reduce taxes on labor in our country. All election manifestos, from the far left to the far right, promise lower wage and labor costs and a higher net bottom line, according to De Tijd’s Electoral Guide.

The ways in which politicians want to achieve this vary: from increasing the tax-free amount and more tax-free flexi-jobs to faster indexation or adjustment of tax scales to a tax reform that treats labor and wealth together.

A new report from the Organization for Economic Co-operation and Development (OECD) on the fiscal burden on labor points to the need for tax reform. In that study, Belgium once again emerges as the tax burden world champion. In no other OECD country is more than half of wages skimmed off by the tax authorities. The researchers compared the tax burden in 2023 for 39 countries, 22 of which are in the European Union.

For childless singles with an average and high wage, as well as for childless dual-income couples, the so-called wage wedge – the difference between the total wage costs for employers and the amount that employees actually receive on their account – amounts to at least 50 percent.

The wage wedge not only takes taxes into account as such, employer and employee social security contributions are also included. Social benefits such as child benefit reduce the wage wedge.

For six of the eight household types studied, Belgium ranks unenviably first. Single people without children in particular see a large part of their wages go up in taxes. For the group with an average gross salary, the difference between wage costs and net income is just under 53 percent. For those with an above-average income, the wage burden even rises to almost 59 percent. In other words: for every 100 euros that companies pay in wage costs, there are 47 and 41 euros net left for the employee, respectively.

The difference in tax burden for singles with number two in the OECD ranking, Germany, is significant. There, workers without a partner or children and with an average gross salary see 47.9 percent go to the tax authorities. The average for the European OECD countries is 41.5 percent (average wage) to 46 percent (high wage). In Belgium the tax burden is therefore a quarter higher.

The wage wedge for a dual-income couple with two children fluctuates between 45.1 and 48.4 percent, depending on the income level of both partners. For a family with children where only one parent works, the tax burden is just over 37 percent. For the latter type of household, the difference between the total wage cost and the net wage is slightly larger in Finland, France, Turkey and Sweden.

Single parents with two children have the lowest tax burden, although at 29 percent it is also the third highest of all OECD countries. Regardless of the family situation, Belgian pressure is always higher than the European average.

Compared to the situation in 2022, the wage burden in our country has decreased slightly: -0.3 percentage points for a single person without children and an average income. Compared to 20 years ago, this is a decrease of about 3 percentage points. Belgium is thus going against the global OECD trend. Year on year, the wage wedge there has increased by 0.1 percentage point, but in the longer term the average looks quite stable.