Wealthy people should pay for government’s Asset Tax repayment: State Sec.

Wealthy Netherlands residents will have to cover the billions of euros in compensation the government has to pay for the savings tax, which the Supreme Court declared illegal. State Secretary Marnix van Rij (Fiscality) made this clear during a debate with the Tweede Kamer, the lower house of the Dutch parliament.

The government must compensate savers who, in recent years, paid tax on a fictitious return they couldn't make in practice due to the low interest rates. How large the affected group of savers is, is not yet clear. Depending on this, the compensation will cost between just under 3 billion euros and almost 12 billion euros.

The government and coalition are still negotiating about where that money should come from. But as far as Van Rij is concerned, the current budget rules will be followed. "The setback is on the income side, you solve it on the income side, and you look for it in the domain where it originated," the State Secretary said. As long as the costs do not exceed around 4 billion euros, this should be possible, Van Rij said.

Coalition parties CDA and VVD said they would also borrow extra money to cover part of the costs. "We are not in favor of taking it from the workers," emphasized CDA parliamentarian Inge van Dijk. She also said she was willing "to allow a bit in the balance if necessary." That's political jargon for increasing the national debt to absorb financial setbacks.

VVD parliamentarian Folkert Idsinga also warned that it might not be possible to collect the entire amount needed for the compensation "within the domain" of the savings tax itself. According to the liberal, "we will have to look much broader, at expenditure, at changes, and at the national debt."

That would be contrary to the budget rules the coalition parties agreed upon. Finance Minister Sigrid Kaag has also indicated that she is against that. According to Van Rij, "you can't expect anything else" from Ministers of Finance as they are "strictly trained" in terms of budget rules.

In the Tweede Kamer, a majority seems to prefer compensation for the smallest possible group. Though this relatively cheap option could lead to a flood of objections, and it is unclear whether the Tax Authority can handle them all. There is also a greater risk that the court will rule in the complainants' favor, resulting in still high costs.