VAT increase to cost Dutch households around €300

The VAT increase next year will increase costs for Dutch households by an average of around 300 euros per year, according to ING economists. The low VAT rate will increase from 6 to 9 percent on January 1st, which is expected to increase inflation by 0.6 percent extra, ANP reports.

The VAT increase will make groceries, books, theater tickets and hairdressers, among other things, more expensive. Though households will also see an increase in purchasing power due to rising income and decreasing income tax, according to the economists.

According to ING, the existence of different VAT rates is disruptive to the economy. Due to the different rates, consumers buy relatively more of the products to which the low VAT rate applies than they would if there was only one tariff. Now that the low VAT rate is increasing, the difference between the normal and the low rate will be smaller, which will be good for prosperity, the bank said.

The bank's experts therefore also call for completely abolishing the low VAT rate, instead implementing single uniform VAT rate.