Dutch government planning VAT increase to 21.4% to fill gap in budget

The government wants to increase the high VAT rate from 21 to 21.4 percent next year to fill a gap in its budget, sources close to the Cabinet told the newspaper AD. That would make things like clothes, streaming services, appliances, and cars more expensive.

The government needs to fill a 1.2 billion euro gap in the budget created when parliament forced it to scrap plans to increase the VAT on sports, culture, and books. The 0.4 percent increase to the high VAT rate would yield 1.3 billion euros.

The Cabinet is working on the proposal and plans to submit it to parliament next week so that a decision can be made in the spring, AD’s sources said. State Secretary Tjebbe van Oostenbruggen of Finance is working behind the scenes with coalition and opposition parties to gather support.

Whether he will get enough support to get the VAT hike through parliament and the Senate, where the coalition does not have a majority, remains to be seen. It is a dilemma because no one wants a tax increase, one of the newspaper’s sources said. “But the choice is: either a little bit in many areas or a lot in some specific areas.”