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Tax increase likely option to replace health insurance plan

Saturday 10 November 2012

An increase in income tax is likely to replace the new coalition's plans to reduce the income gap between rich and poor, according to media reports at the weekend.

The new coalition agreed on Friday to drop plans to make health insurance premiums income-dependent, following an outcry from mainly VVD supporters, who said the plan would hit middle-income families particularly hard.

Ministers and party financial experts have now come up with alternative plans which are currently being studied for their effects on spending power. The revisions are expected to be finalised by Tuesday, when new ministers will hold their first debate with parliament.

Income tax

The Financieele Dagblad says the third tax band may now be increased from 42% to 45%. The government had originally planned to cut the third tax band to 38% to compensate people for the higher health insurance costs. The fourth tax band, currently 52%, could also be put up, the paper says.

Another option could be to press ahead with making health insurance premium's income-dependent but to reduce the effective health tax from 11% to 8% and spread it over incomes up to €150,000.

Labour leader Diederik Samsom has stressed the new plan must meet the conditions of the coalition agreement by strengthening the economy, getting the government's finances in order and reducing the gap between rich and poor.

This means some form of wealth redistribution is inevitable, insiders say.


Meanwhile, the Parool reports that consumer confidence has plummeted because of the 'chaos' in The Hague surrounding the new cabinet's plans.

'The cabinet was formed very quickly and that gives rise to certain expectations,' ING economist Charles Kalshoven is quoted as saying. But that momentum has now been lost in the row over income-dependent health insurance.

'The uncertainty that followed is extremely bad for consumer confidence,' he said. Early research by ING involving 62,000 people shows consumers have been hard hit and their willingness to spend money has reduced still further.

Is increasing taxes a better option? Have your say using the comment form below.

© DutchNews.nl


Readers' Comments

Dutch taxation is the highest in Europe already. They need to find another solution like curbing expenses. There is so much waste in government. Get rid of all the layers, consultants, and plans for infrastructure not needed like underground tunnels, highspeed rail. Just look at what they are doing in The Hague. Is it necessary to tear down Dept. of Justice and Interior to make new buildings?Were they structurally unsound? No....!

By M | 10 November 2012 8:25 PM

Absolutely fantastic..... NOT!!!

Either way, you are making people with a middle-income page, since the third band income tax is for those early around 55,000 to 75,000 euros.

How are you helping anyone?! Tax the REALLY RICH, not those getting by.

By poeliewoepsie | 11 November 2012 12:44 AM

one romanian lettuce was 1.30 euro at ah last week. this week it is 1.80 euro. i am trying to figure out how 2% increase in vat can lead to such an increase in lettuce price. ah people must be great mathematicians , at least better than dorks.

By dork | 11 November 2012 8:58 AM

Save on politicians: replace all deputies with party leaders only having their voting cards credited according to the elections result.
Replace 90% of administration with smart software.
Stop throwing billions on extending highways - game changer needed.
Cut prestige expenses. (never?)
Add 1% in taxes per each chemical used in food.

By Max | 12 November 2012 1:27 AM

"To reduce the income gap between rich and poor" - why not just decrease tax for lower bracket? Or they want us all be poor and demotivate from getting any work at all?

By Alexei | 12 November 2012 6:46 AM

Great... 3rd tax band is for incomes of 33k-55k... tell me how an increase from 42 to 45% is NOT going to hit middle incomes? Bloddy idiots!
If they were to hit the wealthy mainly, and not do the income dependant health insurance, then they need to look at the 4th tax band only (55k+). Else they just managed to hit middle income even more than with the health insurance stuff.
Oh and NL tax is not at all the highest in Europe (look to the nordic countries for what NOT to do!), but that doesn't mean we should attempt to become the leader in income tax.

By bums | 12 November 2012 7:28 AM

The problem with all these plans is they are not redistributing from the rich to the poor.

Either of the proposed changes predominantly takes from the middle, gives nothing to the poor, and have no real impact on the rich. So by eroding the middle, we end up with more poor and an even larger gap between the have & have not's.

By Simon | 12 November 2012 7:50 AM

Simon nailed it. Well said bro.

By dork | 12 November 2012 8:57 AM

The key lies in the reducing of the cost of health care not the increasing tax.
Insurance companies make huge profits on a loss making system. Why?

Why not tackle the inbuilt inefficinties first there is 20-25% slack - yearly more than Eu1000 per man woman and child.

By nd | 12 November 2012 9:02 AM

Thank you Simon - agree wholeheartedly - "eroding the middle, we end up with more poor and an even larger gap between the have & have not's".

I cannot believe the government - these are supposedly people who have studied - how do they manage to make such ridiculous decisions and statements? Are they aware of the anxiety that is surmounting within Dutch society at present?

This is harming the Dutch economy tremendously.

By Maria | 12 November 2012 9:04 AM

The government is "the rich" themselves. They will never cut their own salaries. always middle shall pay and carry the load.

By Roy | 12 November 2012 9:26 AM

Increasing tax means increasing uncompetitiveness. How come hardworking middle class income always the one to suffer first? Why not just hit the top 10% earners to help the lowest 10%? Why must tax band stop at 150k? Gov these days are getting from bad to worse.

By ufo | 12 November 2012 9:49 AM

@dork... in fact inexplicable as lettuce did not have a VAT increase as it is food... perhaps you go to the wrong shop.

By the_expat | 12 November 2012 9:50 AM

impossible, they cannot tax themselves.
It will be even nicer if the only 42% will be increased to 45% , while the 52% will be left as it is..., just a confirmation about their plan to tax middle class, keeping away from the storm the real richest area of society. Finally, it is ridiculous to change plan every week. Who voted for these crazy guys?

By Alfonso | 12 November 2012 9:55 AM

@dork, since lettuce is food, the low VAT rate of 6% applies. Which didn't change.

By pepe | 12 November 2012 10:05 AM

Why tax the common people so much. Why not take away some benefits from Royal Family?
Tax payers are paying for their fellow people, fair enough, but why for the ROYALS?
Will that reduce the burden a bit. And why not cut down on profits of insurance companies?

By JustAthought | 12 November 2012 10:24 AM

This is just re-packaging of the same socialist agenda. A greater effort should be made to curb waste, maintain efficiency and stimulate spending. The government should be trying to re-establish a great country instead of destroying it.

By Mary | 12 November 2012 10:29 AM

And, if the argument here is that the very top earners are the ones who hold the responsibility for building back the economy because they are the business owners...look across the Atlantic to America. Studies have shown wealth is not re-distributed from the top down, only withheld until the economy comes to a grinding halt. Tensions will rise and hate mongering will rise.

By Mary | 12 November 2012 10:33 AM

So, basically, people who make, say, 80.000 euros a year, who pay 52% of those in taxes, will have to pay even more? And the government expects those people to remain in the Netherlands, really?

By phantom | 12 November 2012 11:10 AM

It is a shame that the only solutions the government comes up with are how to force people to pay more. Surely structurally reforming wasteful, stupid or unnecessary constructions that have grown over time would be of more benefit. Plug the loopholes, stop all the deductions and exemptions, stop funding waste-of-space projects, make the taxes simple and get Health care and mass transport away from private wealth makers and back in government hands.

By jaycee | 12 November 2012 11:42 AM

They are obviously going to achieve their goal by purposely making two steps forward. As soon as the opposition rises, they will make 1 step behind and we will all think that we succeeded in stopping them.

By Jonathan | 12 November 2012 11:51 AM

bums, I don't know the Nordic country you are talking about. But I just came to the NL from Finland and tax pressure is considerably (I mean REALLY considerably) higher in NL than in Finland. If it wouldn't be for the 30% rule I am afraid there wouldn't be any foreign worker wishing to relocate to NL. And the list of public benefits that you get in Finland and that you don't get here is just too long.

By gm | 12 November 2012 12:18 PM

How are we to beleive in Politics looking at that big fiasco... at least make sure you agreed before putting people in such a rollercoster. I am already wondering how I will help my 18 years old daughter, being a single mother, to pay for her study and OV card. Tell me how to be optimistic when gouvernment decide to do all the changes at once??? The crisis took place few years ago so why taking drastic decisions only now???

By Anne | 12 November 2012 12:44 PM

Obviously this government does not know what to do and what in reality the country needs, otherwise they would not come with an idiot idea after another. Putting the pressure to those working, will make people look for alternatives outside the Netherlands. This government is Junior and will lead the country to a dark place!!!

By Maria | 12 November 2012 1:06 PM

This solution is better how? Price rises in this country are out of control already on so many fronts - why not just whack up the tax as well so we can give more of the money out on uitkeuring.

By Roger Melly | 12 November 2012 1:36 PM

The great money trick continues.

By Jimmy | 12 November 2012 2:01 PM

What a pile of c..p. The 52%+ tax only stops the hard working middle class families from ever becoming rich and aspiring to the higher class. The really rich DO NOT pay the 52%, because a) they most likely are not paid in salary, but in dividends b) they are most likely not registered in the Netherlands!!! The real rich pay max 13-15% tax if any. Myself I switched to self-employment long-time ago and guess what I work in the Netherlands via my UK company, so that I will pay maximum 20% tax. What a bunch of hipocrats!

By JP | 12 November 2012 2:18 PM

@Bums. I live in a Nordic country and don't mind paying high taxes, since I know that my basic needs are covered and that by paying these taxes I am helping others who are helping me. I left NL because my life was *not* covered. A good friend was told that she will not get chemotherapy because her "quality of life years" are too few. If taxes were progressively redistributed she'd live longer.

By Husserl | 12 November 2012 2:41 PM

@ gm - I'm myself from Denmark.
Feel free to check out the income tax burden in this country (sweden is second in comparison, but they're reducing it where as DK is increasing it again).
Not to forget the 25% VAT on everything from food to insurance to petrol.
@ Husserl - the problem with the "free state controlled healthcare" is that it's insanely expensive and highly inefficient, usually followed by high tax increases to cover the costs.
It's a catch-22 situation really:
State owned usually means costs explodes and quality drops.
Privately owned means they need to pay investors etc and that is their number one priority.
Neither of the options are good for Mr and Mrs Janssen.

By bums | 12 November 2012 2:59 PM

Isn;t it time the bankers were made to pay their way? Last time I looked, not only had Zalm of the ABNAmro still got his freedom, but he was being paid over 700K out of the taxpayers pocket.

By Andy | 12 November 2012 4:41 PM

I've got an idea: why don't we ALL start to work part time so our income does not go over €29,000 e.g. working 3 days a week/60% of €50,000 will give... wow €30,000. We'll save on taxes and can spend our free time spending our money in other European countried who does not tax the middle wage earners like this...this is offering NO incentive to work harder but just the opposite.

By Michael | 12 November 2012 4:50 PM

Not everyone wants to be rich or higher class, JP. Just content and secure. Besides, if we all were, your life would be hell because you would have nobody left in the service industries to wait on you and make you feel "spe-shul" anymore. We'd have to open the door to more immigrants to fill the gaps!! NooOOOOOOOO!!! XD

By CW | 12 November 2012 5:59 PM

Ontario finances the health system for ALL Ontario citizens with what used to be the low GST (tax for books, etc). What is wrong is using the same system here? Linking it to the income of someone makes just as much sense but then make it a fixed percentage which EACH individual will be paying, irrespective of what they are earning i.e. 10% of said income will generate so much money for the kitty.

By Michael | 13 November 2012 6:47 AM

Income tax is must paid and even they are increasing them a lot!

By julieanderson | 23 November 2012 12:36 PM

@Dork - It is the time of year when salad vegetables are going out of season, hence the price increase. Time for sprouts and parsnips I'm afraid.

By Me | 23 November 2012 4:08 PM

If only the increased costs would go towards ensuring doctors remained up to date with medical developments, made referals without the required 'take parecetamol' approach first, took lessons in good manners (don't answer mobieltjes during appointments), and had therapy to rid them of their god-complexes. If only the baby mortality rate was much better. If only consultants worked more than 9 - 5 hours.

only then, perhaps paying for Dutch healthcare wouldn't be so bad. But as it stands, they should be paying us to use it!

By osita | 23 November 2012 6:45 PM

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