CONSIDERATIONS FOR REFORM

All Economics Department Working Papers are available through OECD's internet web site at www.oecd.org/eco/workingpapers JT03276185 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original formatECO/WKP(2009)84 ABSTRACT/RESUMÉ Fiscal federalism in Belgium: Main challenges and considerations for reform The paper discusses the current state of fiscal relations across levels of government in Belgium and how it has developed over time. As the current system of fiscal federalism is creating imbalances between the federal and the sub-federal governments (vertical imbalance), and between sub-federal governments (horizontal imbalance) the paper also suggests directions for improvements. Without reform, the vertical imbalance will widen as the fiscal burden from the ageing of the population falls mainly on the federal level. Reform should therefore strengthen the fiscal capacity of the federal government by improving its revenue sources and by shifting some spending obligations to sub-federal governments. The imbalance between regions arises because of the lack of coherence between taxation and spending. Shared revenue