The Dutch tax system needs overhauling to improve tax collection and benefit payments, junior finance minister Eric Wiebes told parliament on Monday.

The process will take years but simplifying the tax system is vital, Wiebes said in a briefing to parliament.

‘Over the past 10 years we have made the system very, very difficult to implement,’ Wiebes said. Without action, the system will become even more complex and even more vulnerable to errors, he said.

Gradual changeover

The tax office has been embroiled in a number of issues in recent months, including non-payment of benefits and deliberate fraud.

The changeover will be done gradually to avoid a ‘big bang’ and this will take patience from politicians, Wiebes said.

In April, Wiebes and social affairs minister Lodewijk Asscher put on hold plans to replace three separate low-income family benefits for housing, healthcare and children with a single household payment because they were ‘too complex’.

Almost two-thirds of Dutch households get some sort of benefit via the tax office and total payouts are over €1bn a month. The ministers had also hoped to add a new benefit for care of the elderly to the package.

Reforms

Last month, the ruling VVD said the Dutch tax system needs a radical overhaul to remove the plethora of tax incentives and benefits and focus instead on raising money for the treasury.

And last year, a government commission recommended simplifying the tax system by reducing the number of deductibles and merging housing, health and child benefits into a single payment.

The ministers hope to come up with a new package of recommendations by mid-2015.