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Unformatted text preview: ty, i.e. in relation to what may the regions not reduce the progressivity? This
reference was an essential prerequisite to the establishment of the calculation method. In the absence of a reference, as
was the case when the negotiations were initiated, this implies that the regions could not reduce the progressivity in
relation to its previous level. A region that introduced a reduction that increased progressivity (cf. infra) would no longer
have been able to backtrack if, for example, it decided that the reform was too costly. It was, therefore, decided that the
reference progressivity would be that stemming from the application of the income tax code. Each region could thus
always return to the level of progressivity adopted by the federal government.
Officials still had to objectively define the reduction in progressivity. This definition is found in the comment on section 11
of the special act of July 13, 2001, which amounts to saying that for any two taxpayers the one with the higher income
may not benefit from a tax reduction proportionally higher than the tax reduction from which the taxpayer with the lower 33
36 37 206 Section 9 of the special act of July 13, 2001 amending section 6 of the special financing act.
Section 11, paragraph 4 of the special act of July 13, 2001 replacing section 9, §1 of the special financing act.
As far as possible, the federal government will pass on these changes on payroll taxes.
Section 48 of the special financing act stipulates that the national solidarity measureequalizing transfer attributed to each region is equivalent to
468 BEF indexed since 1988, multiplied by the number of inhabitants in the region and the percentage difference between per-capita personal
income tax revenues in the region and per-capita personal income tax revenues throughout the Kingdom, provided that the difference is negative.
The definition found in the comment in the fifth paragraph of section 11 of the special act of July 13, 2001 is hardly clear. For information purposes, it
reads as follows: “As taxable income increases, the ratio of the amount of the reduction and the personal income tax due, before the reduction, may
not increase.” [OUR TRANSLATION] Commission on Fiscal Imbalance income benefits. A last-minute amendment was introduced, which broadens this definition to include cases where the
region introduces a tax increase.
It should be noted that this definition implies that the regions, if they may not reduce progressivity are, however,
authorized to increase it. They may, therefore, strive to achieve more or equally redistributive taxation but, under no
circumstances, less redistributive.
The last principle introduced by the Sainte-Thérèse agreement is that the regions may exercise their jurisdiction over
autonomy in respect of personal income tax, with the exception of any unfair tax competition.38 The commentary
pertaining to the section stipulates that the three restrictions described earlier limit regional autonomy and reflect the
desire of the framers of the special legislation to avoid undesired consequences such as tax migration and...
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