Cabinet collapse looms as VVD pledges to vote against tax plan

The right-wing liberal VVD will vote against its own cabinet’s tax plan if its coalition partners help pass an opposition amendment raising taxes on the very wealthy, the party’s parliamentary leader said on Thursday.

Ruben Brekelmans told MPs during a reopened debate on the 2027 tax plan that the VVD would not back the bill if the amendment, drawn up by left-wing Pro and pan-European progressive party Volt and supported by centrist D66 and the Christian Democrat CDA, is adopted, broadcaster NOS reported.

Brekelmans repeated party leader Dilan Yesilgöz’s call for a “fundamental reset” of the cabinet and said he had also been caught off guard by the deal. Yesilgöz, who is also defence minister, said on Wednesday evening that it breached the coalition agreement.

Several MPs, including anti-immigration PVV leader Geert Wilders, asked how the VVD could vote against the tax plan while staying in government. Brekelmans declined to say what would happen next. “I’m not going to speculate about what-if questions,” he said.

Earlier in the debate, Wilders accused D66 and the CDA of stabbing the VVD in the back. D66 parliamentary leader Jan Paternotte dismissed this as nonsense.

The amendment introduces a new top rate of 38.5% on returns above €60,000 on box 3 taxes, the levy on savings and investments, while the basic rate falls from 36% to 35.5%. The €1 billion raised will go towards cutting the lowest rate of income tax.

It is not certain the amendment will pass. Christian-social ChristenUnie and pensioners’ party 50PLUS, which had conditionally backed the tax plan, have doubts about how the package is funded.

Only €588 million of the €1 billion is linked to specific measures. The remaining €412 million is a target to be met by tackling tax constructions used by the wealthy. Pro and Volt have suggested an “exit tax” on millionaires who leave the country, to prevent capital flight.

The ChristenUnie and 50PLUS haven’t yet said how they will vote. If they oppose the amendment, it may fail, leaving D66 and the CDA without the senate majority they need. According to NOS, the VVD is urging the ChristenUnie to vote against, while Pro leader Jesse Klaver is trying to win over its leader, Mirjam Bikker.

The three parties in Jetten’s minority cabinet have 66 of the 150 seats in parliament, 10 short of a majority, so they rely on opposition parties to pass legislation.

Economic impact 

Employers’ organisations VNO-NCW and MKB-Nederland said the country could not afford a political crisis, and objected to businesses potentially footing the bill.

But ING chief economist Marieke Blom told NOS the amendment would have very little effect on the Dutch economy, and said she did not expect millionaires or companies to leave the Netherlands because of it. “A cabinet collapse would create new political uncertainty, and I’m worried that we would grind to a halt,” she said.

Prime Minister Rob Jetten said “yes” when asked on arrival whether things would work out. Votes on the amendments and the full tax plan are due after the debate.

If the cabinet does fall, an early general election could be held alongside the provincial and water board elections on March 17 next year, NOS reported. It would be the second cabinet in a row to fall within a year.