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Unformatted text preview: ich the federal government contributed each year to the financing of university instruction offered to foreign
students. The amounts determined in respect of each community in 1989 (1 200 million BEF for the French-speaking
community and 300 million BEF for the Flemish community) were adjusted each year to changes in the average
consumer price index. In addition, these amounts could be adjusted to reflect the possible financial consequences for
the communities of decisions made by the federal government in the course of exercising its fields of jurisdiction.
Table 2.1 indicates the amounts of the three sources of financing described earlier. 9
10 Once again the 20/80 allocative key.
Special financing act, section 62. 197 Commission on Fiscal Imbalance 2.1.2. The Saint-Michel and Saint-Quentin agreements in 1993 The method of financing the communities and regions implemented under the institutional reforms of 1988-1989 was
deemed, at the time, to be fairly complete, although it was not permanent. Less than four years later, in 1993, it was
necessary to somewhat modify the method11.
Indeed, it turned out that the methods adopted in 1989 to calculate the breakdown of budgetary resources put the
French-speaking community in a difficult position since it was incapable of financing education, mainly because of pay
increases granted to teachers. It is important to mention that wages represent 80% of the expenditures of the French
To solve this problem, the so-called Saint-Michel agreement was signed. It led to the special act of July 16, 1993
amending the special financing act of January 16, 1989. 12 A community-region merger based on the model of the merger carried out in Flanders13 could have helped solving the
financial problems in the French-speaking Community, but this possibility has been rejected by the French-speaking
authorities. Nevertheless, a solidarity mechanism has been designed between the French-speaking entities through the
so-called Saint-Quentin agreement, which put into effect the new section 138 of the Constitution. This agreement
concerns only French-speaking entities.
Let us recall that at that time, in exchange for its participation in the two-thirds majority needed to complete the federal
structure of the State, the ecologists demanded and obtained the introduction of ecotaxes (environmental taxes), a new
form of regional tax as contemplated by the section 3 of the special financing act. Ecotaxes will be analysed in the
section devoted to regional taxes.
Two types of amendments were introduced into the special financing act by the Saint-Michel agreement with a view to
increasing the funds allocated to the communities.
The first measure concerns the personal income tax transfer. The portion of personal income tax earmarked for the
communities increased by 4.5 billion BEF in 1993. Moreover, starting in 1994, real growth in gross national product was
taken into account in the annual change in the overall amount of the personal income tax transfer earmarked for the
communities and regions.
The second measure concerns the radio-TV fee and marks a chan...
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