Don’t raise value-added tax, government economist tells cabinet

The cabinet would be wrong to increase value-added tax to generate extra revenue and so reduce the budget deficit, Coen Teulings, head of the government’s macro-economic think-tank CPB told the Financieele Dagblad in an interview.

An increase in value-added tax (btw) is one of the options being considered at the ongoing talks between the cabinet and its alliance partner PVV on finding at least €9bn to bring the budget deficit back in line with monetary union rules.
If value-added tax is raised, consumers will be even more reluctant to spend money because it will boost inflation, Teulings said. A lack of consumer spending is the main reason the economy is currently struggling, the CPB said at the publication of new economic forecasts on Tuesday.
Teulings said he does favour the phasing out of mortgage tax relief and an increase in the pension age to boost government coffers.
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