Lobby groups and political parties have criticised government suggestions that the value added tax rates should be unified, saying it will add considerably to the cost of food.
The cabinet wants to cut income tax and increase value added tax as part of a package of tax reforms, junior finance minister Frans Weekers said in statement on Wednesday evening.
The reforms will focus on lowering the tax on labour and increasing the tax on consumption, he said. This could include lower income tax rates and an increase in the amount raised for the treasury through value-added tax (btw).
‘If parliament agrees with a shift in taxation from labour to consumption then the cabinet will want to look into the effect of a uniform btw rate,’ Weeker said.
At the moment, some goods and services – such as food – are subject to 6% btw. Most are covered by the 19% rate.
The ruling CDA, alliance partner PVV and Labour (PvdA) have all came out against increasing the tax on food.
‘We are not going to make the weekly shop €10 more expensive in order to reduce the highest tax band,’ CDA MP Pieter Omzigt told news agency ANP.
Weekers want to make the increase gradual, starting with a rise from 6% to 8% this cabinet period.
Employers organisation VNO-NCW said it welcomed a cut in income tax but that an increase in btw would ‘damage consumers and companies’.
The food retailers association said the measure would add €640m to the annual food bill.
Cabinet wants to cut income tax, increase btw
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