A bird’s eye view on 20 years of tax-benefit reforms in Belgium

Publication type

Research Paper

Series Number



FLEMOSI Discussion Papers


Publication date

April 15, 2015


Belgium has seen major changes in its tax-benefit system over the past
twenty years. These changes have, to a large extent, co-determined the evolution of disposable incomes of Belgian households on one hand, and
their incentives to work on the other. In this paper we assess equity
and efficiency aspects of changes in tax-benefit policies over the full
course of 1992-2012. By simulating effects of current and past
tax-benefit policies using the microsimulation model MEFISTO-EUROMOD, we
summarize the shifts in policy orientation over this period using two
summary measures of redistribution and work incentives.
Our three main findings are: 1) the changes in the tax-benefit system
have to a large extent been pro-poor, and redistribution has been
increased; 2) the introduction of an earned income tax credit and the
lowering of personal income taxes has contributed to improve work
incentives, but this effect was partially eroded by an increase in
unemployment benefits since 2000; 3) the results crucially depend on
whether one chooses as ‘no policy change’ counterfactual indexation with
inflation or indexation with nominal wage growth.






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