High labour taxes and low environmentally related taxes in Flanders
Based on the tax revenues for the period 1995 to 2010, Flanders shows signs of a 'de-greening' of the tax system. The share of environmentally related taxes in gross domestic product (GDP) fell from 2.4 % in 1995 to 2.0 % in 2010. In 2005 their share peaked with 2.5 %. The share of labour taxes in GDP fell slightly from 24.3 % in 1995 to 24.0 % in 2010.
In the majority of countries studied (neighbouring countries, two southern countries and two northern countries in Europe), revenues from environmentally related taxes also fell between 1995 and 2010. The sole exception is the Netherlands. Revenues from labour taxes fell significantly in Denmark, Sweden and Germany, and rose in Italy. They remained more or less stable in the other countries.
In 2010, in the EU-27, the share of labour taxes and environmentally related taxes in GDP was on average 19.7 % and 2.4 % respectively. Compared with the EU-27, Flanders can therefore be said to have high labour taxes and low environmentally related taxes.
In May 2013 the European Commission published Country-specific Recommendations for the Council for the improvement of economic performance. For the third year in a row, the Commission is calling on Belgium to make efforts to shift taxation away from labour to taxes that are less detrimental to growth, such as environmental taxes.
To date, Flanders has not recorded any shift from tax on labour to environment.