Wednesday 28 July 2021

Top tax rate of 52% may be cut, majority of MPs back change

The top Dutch tax rate – currently 52% on earnings over around €56,000 – is likely to be cut to 50% or below, according to media reports on Tuesday.

The Telegraaf says the ruling VVD and the D66 Liberals have suggested cutting the top rate to 49.5%, to compensate home owners for the reduction in mortgage tax relief.

Tax rates in the two lower tax bands may also be reduced, the paper says.

Nos television also says tax cuts are likely following Monday night’s debate on the government’s 2014 tax plans. A majority of MPs, including coalition party Labour, back a cut to 50% for the top rate and 38% for the second band, the broadcaster says.

Fewer hours

The government is in the process of phasing out tax relief on mortgages, currently one of the most generous systems in Europe.

In May, the government’s macro-economic planning agency said the top income tax rate of 52% is too high and that a top rate of 49% would maximise the amount of money coming in to the treasury.

The high tax rate means people choose to work fewer hours rather than see more of their money disappear in tax, the organisation said.

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