From procrastination comes cancellation. You know that expression? With the new corona support for the business community, the word adjustment is a euphemism for a noose of 150 million euros. That is the amount of deferred taxes that entrepreneurs will no longer pay, the caretaker cabinet thinks.
But apparently words like noose, loss or bad debt are too sensitive. So it’s called adjustment. But that’s too daring for the text of the letter from the cabinet last Friday to the House of Representatives about the next round of aid worth 2.2 billion euros. The word adjustment appears halfway through the letter as the fourth footnote.
Also read: Chamber of Commerce sees stress, powerlessness and great emotions in entrepreneurs
State aid for affected companies has become business as usual. It is episode five of the wage subsidy for employees of companies with at least 20 percent loss of turnover, the NOW scheme. The most affected are, again: catering, sports, culture and recreation and tourism.
The multi-billion dollar costs of this and previous rounds of support are not the whole story. Behind the support a silent executioner waits. And in the support the silent sorrow proliferates.
The executioner is patient. Entrepreneurs can again request a postponement of the payment of taxes. This support option was terminated on 1 October. A total of 270,000 entrepreneurs have an outstanding tax debt of more than 19 billion euros, according to Friday’s letter of support.
Minister Stef Blok (Economic Affairs and Climate, VVD) expects an increase in the tax debt of 2.5 billion euros. Hence the amount of the ‘adjustment’. The ministry estimates 6 percent default and loss: 150 million. This brings the total amount of unpaid tax to 1.65 billion euros. How much it will actually be will not be clear until the end of September 2027. Then the period within which entrepreneurs must have paid the debt expires. They have five years to do so, starting October 1, 2022.
In the meantime, it was thought, entrepreneurs can put money aside to pay the debt. But now that is being thwarted by new corona measures, such as the closing time of 5 p.m. in catering and ‘non-essential’ shops.
Behind the support is also the suffering that is called corona. In a survey by the Chamber of Commerce from September 11 percent of entrepreneurs give their own well-being an unsatisfactory score. In the hospitality industry, 25 percent say their private life suffers from work stress. In the hospitality industry, 39 percent of entrepreneurs are surviving or recovering. In the culture, sport and recreation sector even 49 percent.
A quarter of entrepreneurs in culture, sports and recreation say that their company no longer has any equity or only debts. For companies with payment arrears and debts, the Tax and Customs Administration is by far at the top.
For example, the cabinet is inevitably shifting to the question of whether the current repayment arrangement for almost 22 billion euros in tax debt is still adequate. Should the scheme be stretched even further, as was done before, when repayment went from 36 months to 60 months? Or is (partial) forgiveness preferable to entrepreneurs’ fear of the silent executioner?
And what about the frontrunner in tax debt, KLM? At the end of June, the tax debt was 1.37 billion euros. The fifth round of NOW support gives KLM some more air. KLM (27,000 employees) was also the frontrunner in the previous NOW: 1.7 billion euros. Direct state aid (loan, credit guarantees) keeps the company going. The Omikron variant, the maze of closed borders and the uncertainty among travelers are a new setback for KLM and for the state treasury. KLM wants to keep flying, how long does the cabinet want to continue to support that?
Menno Tamminga writes on this site every Tuesday about corporate policy and economics.
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A version of this article also appeared in NRC in the morning of November 30, 2021