Rhein on Energy and Climate

It has become commonplace to blame austerity policies for their negative impact on employment. But such criticism tends to overlook that they may also remove privileges certain social groups have been enjoying over decades.

Take two examples, the Belgian government and the EU.

In its efforts to come to terms with its critically high public debt, the Belgian government has most recently decided to apply value-added tax (VAT) on services provided by lawyers and reduce certain fiscal and medical advantages granted to diplomats residing in the country:

  • Lawyer and notary services had been exempt from value added taxation. For notary services VAT had been introduced in 2012; its extension to lawyer services had therefore become overdue, facilitated by the desperate need for the government to close its budget gap.

  • In line with international tradition, the 55 000 odd-diplomats residing in Belgium benefit from excise tax exemptions for the purchase of alcohol, tobacco and gasoline. The government has decided to restrict these exemptions, a welcome decision. By the same token, it will also ask diplomats to pay for all medical treatments in Belgium.

Combined, both measures will procure extra revenue exceeding € 100 million annually!

The EU has been under increasing pressure to reduce its administrative expenditures. After months of negotiations between Commission, Council and EP it has decided to impose a six per cent “crisis levy” on salaries, extend the working time to 40 hours/week, raise the retirement age to 66 years and reduce its workforce by five per cent. These measures, leading to lower expenditures of more than € 2.5 billion until 2020,would hardly have been taken without the severe budget situation across the EU.

There are thousands of similar examples across the EU, each of them “hurting” special interests, which can brush them off easily compared to our millions of unemployed.

Brussels 03.07. 2013 Eberhard Rhein


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