Despite many appeals from entrepreneurial and investing Belgium to make haste with a reform of the corporate tax system and to scrap the term ‘capital gains tax’ from your political discussions, you consistently postpone the first and stubbornly put out feelers about introducing the latter.
All the rational arguments used so far became entangled in the web of jealousy, stigmatisation and pigeon-hole thinking that unfortunately seems an indissociably part of the political game. But maybe a kind of proof by contradiction can bring the left side to insight?
Let’s try with an alternative, simple and risk-free alternative proposal that will certainly be understood by the (centre) left side. Assume that we replace the capital gains tax with a tax on the profits paid out by the National Lottery to its winners (no less than 830 million euros in 2016!) based on the same philosophy: "no tax for the small fry, the big winners must pay the piper".
In our jealousy culture we primarily want to avoid people becoming “scandalously rich”, don’t we?
Assume for example that the profit of winners in rank 1 (all numbers entered correctly) of “Lotto” and “Euromillions” are taxed with the marginal tax rate of 50%. This would apply to one third of the profits paid out in 2016, or € 288 million. Consequently, this measure would, at a snap of the finger, give the treasury an additional income of no less than 144 million euro, substantially more than the expected yield of the capital gains tax proposed by CD&V (according to the Court of Audit less than 88 million).
This proposal may seem too good to be true: an easy way to generate income, no economic risk whatsoever, it avoids people becoming “scandalously rich” (or perhaps a little less rich) and it may even curb the exaggerated gambling urge of a number of poor punters. Cheers from the seats of (centre) left!
So: comrades, let’s do it: Yes We Can! No?
The reality, unfortunately, is more complex. The higher potential gains are, the more players will participate, and the higher the revenue streams will be. For Euromillions for example, the chance of winning the “jackpot” is only 1 in 140 million, but last year someone in Belgium was lucky and won no less than 168 million, tax free: that is what inspires and encourages everyone to continue playing!