The Netherlands should do more to reform its tax system because the current situation encourages both firms and households to get into debt, the International Monetary Fund said in a new report on the Dutch economy on Tuesday.

While the authorities have recently taken a number of steps in the right direction, for example by beginning to phase out tax breaks on pensions and housing, ‘more could be done and faster’, the IMF said.

‘The large subsidies on home ownership and pension income could be phased out more quickly than currently envisaged,’ which would allow income tax to be cut more quickly, the IMF report stated.

In addition, ‘important tax revenue and efficiency gains would result from harmonising the currently fragmented capital income and value-added tax schemes.’

In general, tax reforms could increase potential growth, enhance fairness, and improve efficiency, the IMF said.

Read the report (English)