Belgian politics: rather electric ‘salary car’ than no car at all
The drastic plan of green parties Groen and Ecolo to abolish the fiscal benefits for the so-called ‘salary car’ by 2022 seems to get few support of the other political parties. Making the 13% of employees with a company car lose several hundred euros per month on their wages is even for the socialist PS party a bridge too far.
It looks, like often in Belgium, there is a difference again in ‘speed’ and accents between the North and the South of the country. In Flanders, a consensus is growing between Open VLD, N-VA and CD&V to keep the system intact for zero-emission company cars only. Open VLD wants to see the current system phased out by 2028, CD&V wants to move faster, already by 2023.
They think by forcing the company car fleet – some 650.000 in total, salary cars included – to become green, they can speed up the replacement of the total (polluting) car fleet in Belgium. In a few years these mostly electric company cars will become available on the second-hand market too.
Both liberals and N-VA got up on their hind legs by the idea that the green parties plan to squeeze money out of the somewhat 465.000 employees (figures of 2017 e.n.) that have the benefit of a ‘salary car’ today.
Mobility budget for everyone
Groen and Ecolo want to use the 3,75 billion euro – the EU Commission calculated in 2017 the tax benefit costs the Belgian state – to smear it out over all employees in the form of a mobility budget. That would account for some 750 euro per year or 62,50 per month per employee, the newspaper De Standaard calculated.
They asked HR service company, SD Worx, to figure out what that would mean for the net wage of the employees that have a company car today. Taking the example of a BMW 2 with a list price of 35.000 euro, the leasing cost is around 600 euro per month.
Losing 306 euro net
To convert this amount (taxes included) into gross pay, the employee will get 502 euro more gross, but only 294 euro net. If he has to buy or lease his car himself, he pays the 600 euro himself or loses 306 euro per month on his current wage.
De Tijd came also knocking at SD Worx’s door for some calculations and says that an employee with a company car pays between 850 and 1.700 euro of taxable benefit in kind a year, while the employer pays another 650 to 1.200 euro of taxes on popular models.
To give an employee with a gross wage of 4.500 euro a net pay raise of 500 euro, his gross monthly income has to increase with 1.250 euro. But on top of the 500 euro net raise, the employee has to pay 758 euro monthly income taxes. It clearly shows how much more interesting it is for both employer and employee to give a ‘salary car’ instead.
So simply abolishing the system by first scrapping the fuel cards in 2020 and the whole system by 2022 is a ‘no-go zone’ for most other parties than the green parties. The latter defend their point of view by stating that they want to lower taxes on income all the way for everybody as part of a total fiscal reform. But in the end the salary car employee will always lose.
Lowering income taxes
In Brussels and Wallonia the green parties find an ally in DéFi, that wants to see the fiscal benefits for salary cars abolished without mercy. They even don’t plan to give a mobility budget to all employees instead.
They rather want the non-taxable income for physical persons to be raised to the level of the poverty line. “The decrease of the taxes on labour will permit an increase of buying power. It’s up to the citizen himself to decide whether he wants to spend this on a car in the future”, a party member explains.
Bridge too far
Even for the mighty French-speaking socialist party, PS, the green plans are a bridge too far. They are in favour of ‘progressively abolishing’ the salary cars, but in a ‘lenient’ way, by keeping the tax benefit for the employees and ‘limiting the impact’ for the employers.
They rather see the recently introduced ‘mobility budget’ used to force the progress and believe this mobility budget must get the chance to prove itself first. That’s also more in par with the other French-speaking parties MR and cdH today.
Evaluating mobility budget
The liberal MR wants to ‘evaluate’ the mobility budget and measure the impact of it to eventually enlarge the offer to a wider group of employees later, if positive. Today the mobility budget – offering a way to choose a number of different ‘greener’ mobility options – is only available for the ones already entitled to a company car.
The christian-democrats of cdH believe one has to make the mobility budget even more attractive to make people trade in their company car. The ‘cash for car’ system the government installed before proved to be a flop all the way because the benefit isn’t big enough, says cdH.
Companies start experimenting
Meanwhile, a lot of companies already start experimenting with the mobility budget. “The most attractive form today as alternative for the company car is a kilometre premium for using the bike to commute, combined with a company pool of cars, scooters and electric bikes, Valentin Haarscher, CEO of D’Ieteren’s MyMove mobility services says.
Another example is given by the Ginion Group, that decided to experiment with letting 10 top managers drive an electric BMW i-3 for daily use and give them the opportunity of using one of the bigger pool cars in weekend or on vacation, when needed. A concept Ginion tries to sell to its business clients too.