Unformatted text preview: o be balanced in
respect of the different entities concerned? What is the state of Belgian federalism in the wake of this new round of
negotiations? What does the future hold in store?
The unrefined vision of the agreements, which often arises in discussion and the media, takes the form of a simple fair’s
fair: the Flemish region is obtaining its keenly sought fiscal autonomy and, in exchange, the French-speaking community
is receiving sufficient funds to get it out of the red.
Our analysis enables us to be more nuanced and to put into perspective the refinancing of the two communities,
accompanied by a loss of intercommunity solidarity, and broader fiscal autonomy for the three regions. Legislators have
sought to clearly delineate this new autonomy, e.g. through the introduction of margins in respect of personal income
tax, the redefinition of criteria governing the localization of taxes that engender a significant risk of delocalization, and
the cooperation agreements required with regard to taxes centred on mobile tax bases. These measures were essential
given that the amounts that the Flemish community is gaining through the community refinancing mechanism (and which
it said it did not need) is largely allowing it to finance a reduction in its fiscal pressure. These guidelines should limit the
risk of harmful effects of fiscal competition.
It can thus be said that French-speakers’ demands have been met, but have been limited by the proportional reduction
in intercommunity solidarity measures. Similarly, Flemish demands have been met, but have been limited by the
measures aimed at reducing the detrimental effects of tax competition. Moreover, autonomy with respect to personal
income tax refunds may not be deemed to be a major gain since such autonomy was acquired in 1989. It is the form of
the guidelines that has been changed: instead of a limitation in terms of interregional cooperation, the limitation now
focuses on margins. In our view, the agreement is balanced from the standpoint of the two entities that requested the
We are less positive about the Walloon and Brussels regions, which have been swept along by this reforming movement
against their better wishes. Of course, putting the French-speaking community back on an even keel should ultimately
prove beneficial, although they are nonetheless facing a budgetary situation that is less stable than it was previously. To
take advantage of this new revenue structure, or at least to avoid losing thereby, is a major challenge in the future for
This observation is especially true for the Brussels region, whose revenues are, proportionally, more extensively affected
by the reforms. Consequently, the region is more likely to be adversely affected by the non-effectiveness of the safety
We would like to draw the reader’s attention to the worrisome situation of the Brussels region. Aside from the
disadvantage mentioned earlier, Brussels will unquestionably be the region most exposed to t...
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