According to our sources, only Minister of Finance Vincent Van Peteghem (CD&V) and Deputy Prime Minister Georges Gilkinet (MR) were available for a reduced rate of 15 percent, as was the case with the spectacular success of the government bond issue in September – when the Belgians promptly signed for 22 billion euros in -, the other ministers do not.
So there will be no new government voucher for that fiscally interesting preferential rate. That was more interesting for investors: if they only had to pay 15 percent withholding tax, it would increase the net return on the government bond from 2.1 percent to 2.55 percent.
Van Peteghem pro
The Federal Debt Agency was therefore the requesting party: they wanted to raise 6 billion euros in this way, and were well aware that without that fiscal push it would not be possible. At 2.1 percent, a saver is often better off with a term account on the regular market.
Minister of Finance Vincent Van Peteghem (CD&V) followed that reasoning: he was of the opinion that a reduced tax could generate an additional 54 million euros for the budget, because issuing a government bond is simply cheaper than taking out loans on the financial markets. Moreover, it would put more pressure on the banks to increase interest rates on savings accounts.
Van Peteghem was also crowned “Minister of the State Bank” last year. Doing that trick a few months before the elections would never have done any harm. Van Peteghem was also able to position himself as the protector of the “small saver” against the banks that are only concerned with their profit margins and their shareholders.
Other ministers against
It therefore appears that the other ministers are against it because the other parties do not want Van Peteghem to score again. They regarded a lower withholding tax as fiscal doping for Van Peteghem’s campaign. This idea is especially prevalent at Open VLD, but Vooruit is also not interested in a favorable regime. In order not to get into political waters, the socialists believe that there can be no preferential rate for the elections.
Although there were also substantive arguments. The banking sector screamed bloody murder when 22 billion euros flowed away to government bonds last year. With some exaggeration, it sounded like a major blow that endangered financial stability. Until further notice, the benches have all remained neatly standing.
But in the meantime the situation had changed and the interest rates on savings accounts – which remained very low – were cautiously increased. State Secretary Alexia Bertrand (Open VLD) and Prime Minister Alexander De Croo (Open VLD) apparently wanted to impose “unfair competition” on the banks once again.
Moreover, Bertrand was far from convinced that the government bond is good for the budget. She already gave negative advice, because the one-year interest rate is simply higher than the ten-year interest rate. According to her, it was better to tie up the national debt in longer-term loans. Although the Debt Agency labeled that reasoning as “intellectually dishonest”. They always want to have shorter-term loans on the books there.
