Dutch government definitely not scrapping dividend tax

The abolition of the dividend tax will definitely not happen, Prime Minister Mark Rutte announced after a coalition meeting on Monday evening. The government and the coalition parties reconsidered and decided to definitively reverse the most controversial measure in the government agreement. "The fact is that support for this measure was limited", Rutte said after the meeting, NU.nl reports.

The abolition of dividend tax would have cost the treasury 2 billion euros per year. That money will now be invested in the business sector and in improving the business climate, Ruttte said in a letter sent to parliament on Monday evening. Both the high and low corporate tax rate will be reduced by more than previously announced in the government agreement. Employers' costs on labor will also be reduced further.

The government decided to reconsider this measure early this month, when Unilever announced that it is scrapping the planned move of its head office from London to Rotterdam. According to Rutte, Unilever's decision was "relevant" for reconsidering the abolition of dividend tax. Rutte's plan for the abolition was made with Unilever's move to the Netherlands in mind.

The abolition of dividend tax was not in any of the coalition parties' election program, but ended up in the government agreement at the insistence of the VVD. The Prime Minister always defended the controversial measure by saying that it would benefit the business climate and create jobs. The CDA was the only coalition party tor openly support the Rutte on this measure. The D66 and ChristenUnie stressed that they are not in favor of the measure, but want to keep to to coalition agreement. The entire opposition was against the abolition.

The opposition parties in parliament are pleased that the abolition has now been reversed, but are not yet satisfied. GroenLinks leader Jesse Klaver calls it "a victory", but adds that "this money does not go to the climate, not to the public sector, but to the big business community", he said on Twitter. The PVV, SP and PvdA also want the money to go "to the citizen", for example by reversing the decision to increase the low VAT rate from 6 to 9 percent.

Rutte emphasized on Monday that the government is already investing 6 billion euros in the public sector and implementing tax cuts for citizens. A collective bargaining agreement was also recently concluded for primary education, and an agreement is being negotiated for the police.