Structure and development of tax revenues Belgium belongs to the group of EU countries with the highest tax levels, alongside the Nordic countries, Austria, France and Italy. Although it has slightly declined over time, the tax-to-GDP ratio (2010: 43.9 %) is the third highest in the EU, after Denmark and Sweden, and significantly above the EU average (2010: 35.6 %). The structure of the Belgian tax system, in terms of the share of revenue raised by the broad categories of taxes, has remained relatively stable since 2000. A far-reaching tax reform of direct taxation that was gradually implemented in the first half of the last decade, reduced PIT revenue, expressed as % of GDP, from 13.4 % in 2002 to 12.4 %, in 2006. The structure is however still characterised by a relatively high share of direct taxes in GDP (3rd highest in the EU), reflecting a broad reliance on personal and corporate income taxes, and social security contributions (6th highest in the EU). By contrast, with 13.3 %, the share of indirect taxes is just below the EU average (EU-27 13.5 %). Following the 2002 corporate tax reform and a favourable business cycle, the share of corporate tax revenue had significantly increased until 2006. A reduction in the tax base of corporations due to the ACE system and the unfavourable economic conditions since 2008 seem to have reversed this trend. The subsequent introduction or increase of several tax expenditures put the personal income tax revenues on a downward trend since 2003. The tax reform was complemented by successive targeted reductions in employers' social security contributions. Since 2007, the trend of SSC is reversed. Belgium is a federal state with a large fiscal autonomy for the regions. This translates into varying specific tax legislations across regions, e.g. registration duties, inheritance and estate taxes. While the revenue level of the federal state is on the decline since the turn of the century, the revenues from the regions have remained relatively stable over time. Regions benefited from the buoyant real estate markets. A larger share of tax revenue has also been allocated to the Social Security Funds. Keeping relatively stable until 2002, the overall tax burden declined almost continuously between 2003 and 2007. (by 1.3 percentage points), notably owing to a drop in revenues from corporate and personal income taxes, and SSC contributions, linked to the income tax reform, successive targeted reductions and the introduction of the ACE system in 2005. Since 2008, an increasing trend of the tax-to-GDP ratio is masked by the economic cycle. Taxation of consumption, labour and capital; environmental taxation The implicit tax rate on consumption increased in 2010 due to improved economic conditions compared to 2009. At 21.4 %, it was just above the EU average (EU-27 21.3 %), as for most of the last decade. As a percentage of GDP, VAT and excise duties collection are at the lower end in the EU at respectively 7.1 % and 2.2 % (EU average: 7.6 % and 3.2 %). Despite noticeable labour taxation reforms, Belgium still imposes relatively heavy taxes on labour with an implicit tax rate of 42.5 %, the second highest in the EU. Targeted rebates in employers' social contributions were used as the main instrument to reduce labour costs. The 20002006 reform programme paved the way for easing the tax burden on labour and led to a decrease in the ITR by 1.3 percentage points between 2004 and 2006. The ITR on labour has been relatively stable since 2006, although it has declined in 2009 due to the economic slowdown. However, the ITR on labour does not take into account wage subsidies, which have been increasingly used over the past five years and should reduce the ITR further by 3 percentage points over the 2002-2009.(See Valenduc (2011). The ITR on capital increased from 29.5 % in 2000 to 32.8 % in 2006, after which it declined to 29.5 % in 2010. This reflects on one side the gradual increase on the household side since 2000, explained in part by the boom in the real estate market that has resulted in an increase of registration duties. In 2010, taxes on stocks of