Many SME business owners are concerned about new VAT rates; PVV leader defends measures

Business owners in many sectors fear they will have to deal with increased VAT rates, just like the sports and culture sectors, with the new Cabinet. MKB-Nederland chairman Jacco Vonhof said this during the Miljoenen Ontbijt in The Hague. MKB-Nederland is an organization that represents the interests of small and medium-sized enterprises (SMEs).

The new Cabinet wants to raise the VAT from nine to 21 percent in the culture and sport sectors, which would apply to, for example, a theater show or the gym. VAT increases were also announced for books and hotel overnight stays. Interest organizations from the sector are scared that a higher VAT will result in higher prices and that this will have a negative impact on people's well-being and reading skills.

Vonhof said on Wednesday that he hears daily from SME business owners who fear higher VAT rates in their sectors. These are mainly business managers in shops and catering establishments, including hairdressers, flower traders, and small eating establishments. "This is one that we are very critical of," he added.

According to him, business owners are worried that the increase will reach their sector. Vonhof also mentioned the wishes of the parties D66 and CDA. Those parties want the plans to increase the VAT in sports to be replaced by raising prices for tobacco products and taxing e-cigarettes. At the same time, Vonhof emphasized that he wants to wait and see what the next days bring. The debate about the budget plans started on Wednesday and will continue on Thursday.

The chairman said that interest organizations for people with SMEs want the Cabinet to abandon their plans to increase the VAT rates in all sectors. "We also have many cultural and sports entrepreneurs in our constituency. They are hit hard by these measures."

He also criticized the plans for a stricter migration and asylum policy. "Can we do without skilled workers and knowledge migrants? No. Do we want unbridled migration? No. I am not a fan of saying: this sector can and this sector can't. But you can give sectors that you do want a little more opportunity and leave the choice to other sectors as to whether or not they want to bring in people from outside."

According to him, it is good to examine sectors that are important to everyone, such as healthcare, construction, and work in the energy transition.

PVV leader Geert Wilders is defending the measures, saying that sometimes painful measures are needed. He refused to cooperate with D66 leader Rob Jetten's proposal to abolish the measure during the Algemene Politieke Beschouwingen, which is the General Political Considerations.

Wilders admitted that the VAT increase is not a "sympathetic measure" but said that this is necessary to balance government finances. Taking difficult measures is part of governing, said the right-wing politician. "And that sometimes hurts, yes, but there are many good things in return."

Jetten did not accept this explanation. "Your Cabinet has decided to make everything people enjoy more expensive," he responded.

There is also confusion concerning the measures, as the Council of State and the Netherlands Tax Administration admitted they have doubts about the plans.

In the implementation test, The Netherlands Tax Administration wrote that the intervention does not simplify the tax rules. Because a particular distinction must be made between different services, the tax authorities fear an increase in the number of legal procedures. The reduced VAT rate is abolished on overnight stays, but an exception applies to "camping sites," as can be read in the financial annex of the coalition agreement.

For cultural goods and services, a rate of 21 percent will still be applied instead of the nine percent that currently applies . However, cinemas and day recreation (such as amusement parks) are exempt. According to the Council of State, the government does not explain why a lower rate will apply for an entrance ticket to the circus and the zoo than for a museum ticket and tickets for a concert or sports match.

The Cabinet does not give an apparent reason for the difference between, for example, a film in an open-air theatre and the cinema, the Council of State noted. As a result, "the choices made seem arbitrary". The Council of State, therefore, does not immediately see how the measure "contributes to the simplification of the tax system and a more consistent taxation of various goods and services." The opposite seems to be the case; the government's most important advisor wrote in response to the Tax Plan for next year.