Coalition on knife edge as VVD weighs response to tax deal

The future of the coalition government is hanging by a thread after ruling parties centrist D66 and the Christian Democrat CDA struck a tax deal with two opposition parties on Wednesday, despite staunch objections from their coalition partner, the right-wing liberal VVD.

VVD leader Dilan Yesilgöz told reporters on Wednesday evening that the deal breached the coalition agreement, and that she wanted talks on a “fundamental reset” if D66 and the CDA went ahead with it.

According to broadcaster NOS, D66 and the CDA will vote for the amendment agreed with left-wing Pro and pro-European party Volt, regardless of what the VVD decides. The amendment will raise taxes on the very wealthy to cut the lowest rate of income tax.

The VVD had said it was “unthinkable” it could vote for the amendment in its original form, with MP Wendy van Eijk calling it “bad for the Netherlands”.

Yesilgöz said the new, watered-down version was still “a bad deal”, and that the VVD had been “caught off guard”. “Of course, if D66 and CDA would rather have a coalition agreement with Pro, then just say it,” she said.

Prime Minister Rob Jetten pulled out of an EU meeting in Dublin to attend Thursday’s debate on the tax plan, which starts at 10.15am Thursday.

The amendment D66 and the CDA agreed with Pro and Volt is a watered-down version of a “millionaires’ tax”. It would raise €1 billion, down from €1.5 billion in Pro and Volt’s original plan. It adds a new top rate of 38.5% in box 3, the tax on savings and investments. The money will go towards cutting the lowest rate of income tax.

Pro leader Jesse Klaver said the VVD was not involved in the negotiations. CDA leader Henri Bontenbal said the VVD had been kept informed “at several moments”.

Parliament backed a motion on Tuesday saying that if a cabinet collapses mid-term, MPs should first discuss forming a new coalition before new elections are called. Only one Dutch cabinet since 2000 has survived its full four-year term.