Saturday 06 June 2020

Cut income tax and raise taxation on assets: finance ministry report

Photo: Joep Poulssen

The Dutch tax system needs overhauling, with less emphasis on taxing income and more on taxing assets, according to finance ministry researchers.

The researchers drew up a list of seven problems with the current system and 169 points to consider, which they hope the next government will use in drawing up its tax strategy.

At the same time, policy initiatives have been worked out which ‘aim to reduce the difference in tax pressure between employers, the self-employed and pensioners, tackle tax evasion and make the system simpler.’

In particular, the emphasis in the current system is increasingly on taxing labour, the report says. Yet, the rise of flexible employment patterns and the platform economy require changes in the way tax is levied.  ‘It has become less attractive for people earning middle incomes to work more in the past 15 years,’ the report said.

The researchers argue that the way assets are taxed in the Netherlands is not uniform, leading to delays and lawsuits, while it is increasingly difficult to tax corporate profits.

In addition, taxes are not being used sufficiently to head off damage to both health and the environment, the report says.

One option the researchers recommend is a cut in income tax and an increase in the tax on assets. A tax on flying and on meat, and higher energy taxes, would also be options, the researchers said. ‘The Dutch support higher taxes on polluters, even if it affects them,’ the finance ministry statement said.

The report was commissioned by tax minister Menno Snel who resigned earlier this year.

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