Increase tax on Dutch wealthy: OECD

Yacht
. Source: Flickr/Chuck624

Labour and consumption are heavily taxed, while wealth is taxed lower than in other Western European countries, according to figures from the Organization for Economic Co-operation and Development (OECD). 

The tax on capital in the Netherlands, which includes the yield tax, is in the OECD average. Other Western European countries tax higher on capital, however, the Volkskrant reports.

According to the analysis from the OECD, the main reason why the wealth tax is lower in the Netherlands is because of subsidizing private homes and pensions. The current scheme is also becoming outdated, making it untenable. There will be too many unemployed people to bring in the tax. This is why inheritances taxes must go up, in order to bring down the burden on labour.

According to economist Bas Jacobs, there is 'very little' tax imposed on capital, asset incomes and inheritances. Taxes and premiums yielded around €240 billion to the treasury last year, which is almost 40 percent of the GDP. Of that, the wealth tax was good for around 1.7 percent, or €10 billion.

Jacobs points out that the two most important sources of capital are private homes and pensions, whose net profit are subsidized via mortgage interest reduction and the reduction of pension premiums. Taxes on homes and inheritance must go up, then, to avoid the government from rewarding what Jacobs calls 'rentier behavior'.

Critics say it is risky to take on wealth in such a rich and egalitarian - with regards to income - country as the Netherlands. Nevertheless, most experts believe that there will be an exchange between higher burdens on incomes and lower burdens on labour. Employees will then also keep more money in their pockets, and employers will see their burdens decrease, which could create jobs.

Tags: