Tax reforms could spark a ‘baby boom’ in 2024 as prospective parents try to hang on to a tax break worth €30,000.
The cabinet wants to abolish the IACK, a means-tested tax credit for parents with children under 12, from January 2025, saving the Dutch treasury an estimated €1.7 billion.
But MPs have warned that the move could act as a perverse incentive for parents to have their first child before the end of 2024 and even lead to a rise in premature births.
‘Let there be no misunderstanding: this is what happens with these sorts of financial incentives,’ independent MP Pieter Omtzigt said. ‘Isn’t that asking for trouble?’
Parents will pay up to €30,000 more in income tax during the first 12 years of their children’s life once they are no longer eligible for the IACK, but those who already have children on January 1 2025 will be locked in.
The tax break was introduced to make it more attractive for families with children to keep working, but ministers argue that it will become redundant now that the state is planning to fund nearly all out-of-school childcare directly.
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