Coalition parties ask Cabinet not to increase VAT rate; businesses also concerned

The coalition parties PVV, VVD, NSC, and BBB have asked the Cabinet to cancel plans to raise the highest VAT rate. This was mentioned this week as an alternative to the plans to raise VAT on culture, books, and sports. The parties had already criticized the idea publicly and came together on Thursday to emphasize that with a motion. This motion is expected to garner significant support in parliament.

The Cabinet promised the opposition at the end of 2024 that they would look for an alternative to the plan to charge higher VAT rates in the culture, books, and sports sectors.

State secretary Tjebbe van Oostenbruggen has therefore been tasked with finding a different way of bringing in one billion euros from VAT. One of the options he came up with was raising the highest VAT rate from 21 percent to 21.4 percent.

In addition to the coalition parties, opposition parties like GroenLinks-PvdA, SP, and SGP also dismissed the proposal directly. Therefore, it never had a chance of receiving a majority in the Tweede Kamer, the lower house of the Dutch parliament.

According to the trade association Ondernemend Nederland, the possible VAT increase would mainly affect sectors that are still recovering from difficult times. Erik Ziengs, chairman of ONL, emphasized: "What people in The Hague often forget is that entrepreneurs have already had a lot to deal with in recent years. Many entrepreneurs are still dealing with debts from the coronavirus, which hang like a millstone around their necks. "

During the pandemic, many felt compelled not to pass on any additional costs to the consumer, for example, in the catering industry. Their margins were already thin and have, therefore, become even thinner. "That 0.4 percent would, therefore, weigh extra heavily," Ziengs added.

For many entrepreneurs, the VAT increase feels like a new signal that the government is not taking them seriously, the interest group said: "It seems as if entrepreneurs are constantly having to pay the bill for the government's mistakes. They are not involved in decision-making, but have to pay for the consequences. It is yet another breach of trust."

According to the interest group, In order to regain the trust of entrepreneurs, solid and clear proposals are needed to help them. "Think of reducing the administrative burden. I know many large companies that would rather invest a few million euros in sustainability than keep track of mileage and report to the RVO."