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Let us start up !

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Thomas Leysen, president of the FEB (Fédération des Entreprises de Belgique)

End of January, the Belgian employer’s organizations were shouting of alarm, by setting up a petition named “Let us Start up”. As most of countries, Belgium did not escape to the financial and economical crisis. But this initiative was launched after the announcement of General Motors restructuring plan in her European subsidiary Opel. It means the closing of the Antwerp factory with 2300 axed direct jobs and negative economical consequences for the country.  Belgium is a country where the production of cars was important, and this sector was providing a lot of jobs. But since many years, the jobs in the automotive sector are decreasing after several restructuring and delocalization plans.

But automotive is not the only sector where the number of jobs in the big companies is decreasing. The Belgian economy, as it is the case in other countries, is in a transformation process. But some statistics are showing that Belgium is one of the European countries where the creation of companies is the lowest. In such economical circumstances, some leaders are thinking that it is time now to do something in order to reverse this negative trend.

Why have we reached such situation? There are few elements to explain this. It is important to understand that the economical picture of the two regions of the country is not the same. In the south of country, there was a huge presence of steel industry and coalmine. In the year seventies, these industries declined, and the number of unemployed people increased constantly. Some economist are saying that the mistake of the authorities is that they invest a lot in social measure, which is good on a short term basis, but not enough in economical measure in order to boost the economy. In the north of the country, the industry was most diversified, but since few years, the trend of the economy begins to be the same, with the restructuring of the automotive industry.

The petition launched by the employers organizations intend to make people sensitive to the fact we need to create incentives for people who want to create their own business. One of the major obstacles is a high tax level. Regarding that point, everybody does not share the same point of view.  We have to know that the applicable tax rate for companies amounted to 34%. This is the theoretical tax rate. But some measures were voted by the government some years ago, in order to attract some investors and companies from foreign countries. One of these measures, which are discussed presently, is the “notional interests”. These notional interests are deductible from the taxable income, and are calculated on the equity of the companies. The goal of such measure was to reduce the tax charge, and on the other side, to encourage companies to create jobs with the realized savings. But in fact, a lot of big companies realized tax and charges savings, but never created new jobs. The unions want to suppress such measures as the initial goal of these was not respected.

The problem is that the suppression of such measures represents a difficulty for the small and medium sized companies which have less equity and have to face bigger difficulties to finance their growth and to develop new channels of products. For such companies, which are taxed with a theoretical rate amounted to 34%, the effective rate is sometimes higher than the theoretical rate, after excluding the non deductible expenses from the taxable basis. By suppressing the notional interests for these companies, the effects will be the opposites of the expected and needed ones.

What I explained here is about the income tax. But we have to speak also about the employee’s taxation. When a people receive 50 Euros as net salary, it cost around 135 Euros to the company. This amount does not include the possible redundancy indemnities. The social securities expenses are heavy.

By explaining these different points, I want to explain that the conditions to create companies in Belgium are not optimum. And these last years, the government invests a lot of money in different employment plans in order to create jobs for unskilled workers, which is a good point, but these jobs are precarious. The government should invest first in the education, in order to revalue professions which for we are missing qualified workers, mainly in the sector of construction.  They should also invest in the universities in order to sustain the research and development which are the pillars of new economical developments. By developing our economy with small and medium companies, we can ensure a sustainable social system where everybody could act following his expectation. We have to encourage people to do what they want to do, and not only to look after job security. But to encourage people to create their own business, we need to give them real incentives. It is important to have public infrastructures and an efficient administration, but a strong social system could only be financed by a strong economy.

It is for sure that everybody can not create a company. Each of us, we have different capacities, our strengths and our weaknesses. There are people who could become entrepreneurs, other who will become brilliant scientists, efficient state employees, but I am convinced that there are a lot of people who do not use their potential and who ignores the talents they could have. Most of the time, it is because the prevailing attitude does not incite to use their potential. If you tell somebody he is stupid during all his life, he will be stupid.

What we need today, is people who wants to start up, with the sense of ethics. To start up is a way to conquer our freedom, and we do not have to be afraid of our freedom. But the authorities have to give us that freedom. So, …..Let us start up!

Petition website: http://www.laisseznousentreprendre.be/ –  http://www.laatonsondernemen.be/

Group on LinkedIn: http://www.linkedin.com/groups?gid=2694300&trk=anetsrch_name&goback=%2Egdr_1265061522642_1

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Written by Eric Saint-Guillain

February 2, 2010 at 00:03

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