Bart De Wever (N-VA) and Paul Magnette (PS) wanted to use the proceeds of a capital gains tax to reduce the withholding tax. People have already dreamed aloud of a tax reduction of 2 billion euros.
In the video that N-VA chairman De Wever posted on social media on Monday, he says that he was convinced that a strong coalition agreement, with a tax cut, was possible. On the table was a capital gains tax, which mainly taxed capital gains on shares. With the proceeds of this, the withholding tax could then be reduced.
That would amount to a new tax shift within wealth taxation. By broadening the taxable base in wealth taxation, and thus increasing income, the withholding tax of 30 percent could be reduced. De Wever & co have already dreamed of halving the withholding tax to 15 percent.
The starting point was that in the long term it would be a tax shift and not a tax cut, but because a capital gains tax only has an effect on the income after some time and a reduction of the withholding tax immediately, it would in the first years about a tax cut, a tax incentive, which had a budgetary price tag.
That was justifiable, because now the consequences of the corona crisis must first be dealt with. With a tax cut, De Wever and Magnette wanted to boost the economic engine for the two years that they wanted to set up a government that would work on an economic recovery.
Capital gains tax
The liberals also believe that a budgetary path should only be mapped out after two years, so that we can move towards a balanced budget within ten years. That tax cut was also the bait that Open VLD chairman Egbert Lachaert was presented to, but the liberals recoiled from a capital gains tax.
Exactly how far the tax cut would go had not yet been completed. The smaller the extension of the taxable base was kept, for example by taking capital losses into account, the more limited the reduction in withholding tax would be.
Conversely, the broader the taxable basis, the further one could go with the tax reduction, and also the burden on labor could decrease further. For example, if the favorable tax regimes for insurance products were to disappear, or if a securities tax was introduced again, there was more room for a tax reduction.
All those elements were on the table, but whether it actually contained the 2 billion euro tax cut that De Wever dreamed of, is doubted.