In their struggle to keep the electorate happy, politicians shun no means to reach that goal. Lying and deceiving are the standard ways to put the citizens on the wrong foot. What effectively is done about real problems is not the issue, perception is everything.
Last week the Belgian Minister of Finance launched a new proposal to tax the rich. Belgium has been in a kind of uproar since the appointment of the current government because – just like all the legislatures before them – they raised taxes for the ordinary people. These are protesting the fact that no contribution is made by the big companies and the rich, which are – as we know now – exempted from taxes via ‘rulings’ offered by politicians via the Belgian IRS. These rulings were kept secret from the general public for a long time, but after ‘LuxLeaks’, the leaking of documents about tax exemptions for companies and the rich in the Grand Duchy of Luxemburg, reporters found out that Belgium also offers special treatments to those who have too much money to pay.
Unions in Belgium have taken a categorical stance against extra taxes for the working people while the rich do not contribute. Neither do they pay any taxes, but that is beside the point in this plea. The slightest disagreement with the government nowadays leads to actions by the unions, just because they do not appreciate the way the government is taxing the less-than-rich (except the unions, but they are rich).
Fortunately we have politicians to solve the problem, or rather to change our perception of the problem. The Minister of Finance declared that a withholding tax of 25% would be imposed on all foreign funds held by Belgian citizens. The Cayman Islands being a renowned tax haven for shady wealth, the tax was promptly baptized ‘Cayman tax’. The latest estimate of the wealth parked in foreign tax havens by our reverent Minister was in the order of 60 billion euros. The cautious estimate of specialists in this matter is the quadruple of that sum. But hey, you can’t be too strict on those people having to immigrate their money to get some yields less-than-rich can’t get.
We are talking about a ‘withholding tax’, that means that interests and dividends are taxed, not the original sum. The government is pleased that the new tax will enable them to make a ritual sacrifice to the God of the Black Hole of Belgian Treasury of 460 million euros per year, to start in 2016. I do not know on what yield those numbers are based, but I can only guess that the actual yields achieved by those 60 billions are far higher than 4% (the average yield when renting out property in Belgium). When I calculate with the minimal 4% yield (by interests and dividends), a taxation of 25% on those gains would result in 600 million euros of taxes. So somewhere the line already 140 million euros have disappeared even if we calculate with the cautious prognosis of 4% yield achieved by investing those 60 billions. Count on politicians to make money disappear even before they can put their hands on it!
The sum of 460 million represents 0.0077% of the total wealth parked off shore by Belgians (as estimated by the brave Minister). Does the revolutionary Minister believe the Belgian public opinion will be appeased by the ‘bloodshed’ his new ‘Cayman tax’ will cause within the ranks of the wealthy? He does, and in the end, I fear I have to admit he will be right…
Keep on smiling! ? yann