This is written by officials led by AFM chairman Laura van Geest in an advice to the cabinet on the distribution of wealth in the Netherlands. According to the research, wealth distribution in the Netherlands is ‘more skewed than previously thought’ and people with large wealth pay relatively less tax. They argue that the top 1 percent of wealthy people pay less tax on average than other households “because income from work is taxed more heavily than income from property”.
The officials are therefore coming up with several packages of measures to reduce these differences. They also take a look at their own home. They propose to reduce the rate for the mortgage interest deduction in steps from 37.05 to 31 percent. In recent years, various Rutte cabinets have already cut back considerably in this deductible item, which was once more than 50 percent.
The researchers also propose to significantly increase the notional rental value from 0.45 to 2.45 percent. They also see potential in a tax levy on the equity value of a home when it is sold. The more than 7 billion euros that would be collected from homeowners with all these measures will be used in that plan to lower income tax for everyone.
The report contains a number of packages of measures that the government could use. These concern, for example, taxing entrepreneurs and companies in a different way. For example, by abolishing the low income tax rate and the SME profit exemption and using the money that is released as a result for lower employer contributions for companies and lower income tax for citizens. The civil servants also take the tax advantages in business succession and the ‘transfer’ of interests in companies.
Minister Sigrid Kaag (Finance) has not yet responded substantively to the options presented by the researchers. The minister calls the report ‘very insightful’. The cabinet has already stated recently that it wants to tax assets more heavily and has already taken steps to that end in the Spring Memorandum. Prime Minister Mark Rutte says in his press conference on Friday afternoon that he wants to make tax changes ‘very precisely’. “You don’t want to touch someone’s first house, your pension or the SME,” he says.
The cabinet will not really respond to the report on Budget Day. “We will discuss it politically in August,” says Kaag. “We need to talk about that calmly, how you can deal with it. I am not going to make any hasty statements about that now.”