Municipalities set too strict requirements to exempt low-income households from taxes

In the past year, most Dutch municipalities applied stricter requirements than necessary to exempt low-income households from municipal taxes, NOS reports after it surveyed 180 municipalities.

Municipal taxes cover waste and sewage collection and processing and property tax for homeowners, among other things. These taxes will increase by about 6 percent for homeowners in larger municipalities this year. Residents with low incomes can obtain remission for these taxes. But most municipalities set the income limit for this exemption too low, according to the broadcaster.

The limit for such tax exemptions used to be 1,775 euros in the bank and no other assets for a single person, and higher for single parents or couples. In September, the government increased that limit to 3,275 euros for a single person to give low-income households more financial space to build up some savings as a buffer to absorb setbacks.

“You really need such a buffer for a financially healthy household,” Andre Moerman of the National Organization of Social Counsellors said to NOS. “This prevents debts.” People without a buffer will have to make debts if their washing machine breaks or their energy bill turns out higher than expected.

And yet, over half of the municipalities that responded to NOS did not use the higher limit for tax exemptions in December. Moerman called that remarkable since municipalities could increase the limit from September, before the tax assessment of 2022.

“They knew this was coming,” said Moerman, adding that municipalities have been calling for a higher limit for years. “If it is finally successful, municipalities should introduce it. If they have not done so for 2022, then at least for 2023.”

The low limit specifically hits people with a low income and a little bit of savings. “As a municipality, you should not punish that but reward it,” Moerman said.

Many municipalities told NOS that they intend to use the higher limit for this year, but some are more hesitant. Berg en Dal, for example, said it “wants to first investigate the financial consequences of the measure.” Almere also wants to take a closer look at the effects first.

Because the municipalities do not introduce the policy simultaneously, how much a low-income household struggles depends even more on where they live. In December, experts already raised concerns about inequality growing based on the different support municipalities give their low-income residents.