VVD: Tax system must change

A Filipino girl (Picture: Wikimedia Commons/U.S. Navy photo by Mass Communication Specialist 3rd Class Paul D. Williams)A Filipino girl (Picture: Wikimedia Commons/U.S. Navy photo by Mass Communication Specialist 3rd Class Paul D. Williams)

VVD-leader Halbe Zijlstra is saying that the current tax system needs to be overhauled in favor of simplicity. The party told the cabinet that all allowances must be abolished and transformed into lower taxes. The Tax Administration must focus on the core task: collecting money.

Taxes must no longer be used to stimulate, steer and influence society, the party emphasized. Halbe Zijlstra, fraction president of the VVD-fraction in the House of Parliament tells the Volkskrant that he is latching on to the growing call within The Hague for a fiscal system amendment.

In the past, the tax system has been changed around every ten years, amended to the state of society. Since 2001, for example, the number of independent entrepreneurs has risen spectacularly.

The current cabinet's task would be to prepare the next cabinet for the likelihood of such a change. PvdA-ministers Asscher and Dijsselbloem, of Social Affairs and Finances respectively, have already spoken of a necessary re-imagining of the tax system recently.

Asshcer and Dijsselbloem have a primary target of lowering the levy for labor to stimulate employment at the lower end of the job market. The cost of this would be compensated by tax hikes on environment, and heavier taxing on capacity.

Zijlstra finds that the tax system has "changed into a moloch that pumps money around in a senseless way and pursues a realizable society." With this, Zijlstra alludes to the way in which fiscal stimulants have grown, "to influence people's choices."

The VVD-leader says that the existence of choices such as whether or not to install solar panels on the roof, to smoke, to drive electronic to make debts, or to live green. "This is why we have lost the overview entirely", Zijlstra says.

Kees van Dijkhuizen, the new financial man from ABN Amro, is not going as far as Zijlstra to say that the allowances system is "a useless carousel of tax money", and that all allowance schemes should be scrapped. Instead he offers a solution as sticking all allowances in one new household allowance.

Van Dijkhuizen also wants to do away with many deductions and tax discounts, and bring the current four tax brackets to two. Hereby, almost 12 of the 13 million tax payers would fall into the first bracket. Further, everyone will pay the maximum mortgage interest of 30 percent, and pensioners at the AOW tax age will have to pay the same tax tariff as working people. This will largely be compensated for with VAT-hikes.

Van Dijkhuizen's proposals will receive a cabinet reaction on the 1st of July, by state secretary of Finances Eric Wiebes. Wiebes wants to take the time to think about the changes to the tax system before making dramatic changes.