The cabinet is still considering the repayments it must make to savers and investors now that the so-called savings tax has been dropped by the court. The House of Representatives can now participate in decisions about the headache file. The price tag may rise to 11.7 billion.
Are we going for the expensive variant, the more expensive, or the most expensive? That question is before the House of Representatives, now that the cabinet is asking parliamentarians to think about what to do with the savings tax problem. That headache file was born in December, when the Supreme Court canceled the method with which tax has been levied on assets in box 3 since 2017.
Since that year, the Tax and Customs Administration has applied a new formula, with two rates: a lower rate for savings and a higher rate for investments. Where it went wrong was that savers also had to pay taxes on supposed investments, even though they hadn’t put a cent in stocks. The judge drew a line through that fiction. The Supreme Court ordered that savers who had objected should be reimbursed for overpaid tax.
Cheapest variant
Question of the past few months: who will we (have to) repay? State Secretary Marnix van Rij (Tax Authorities) is now submitting that button to the House of Representatives to think along. He also calculated a few flavors. In the ‘cheapest’ variant, only the people who went to court are compensated, but that group of 60,000 already yields a price tag of 2.4 billion.
Yet Van Rij does not consider this option kosher because of his ‘sense of justice’: others who did not object have also suffered.
Therefore, there are still two variants on the table to correct the error of the six years since 2017. Option one is the ‘savings variant’, in which people with mainly savings receive money back. Those who have mainly invested will be left behind in this variant. The price tag: 6.9 billion.
Option two is a variant where large savers still get money back, but large investors may as well. It is examined from year to year whether their return was lower than assumed by the tax authorities. Compensation should then be made for those years. The expectation of Van Rij is that this is the more expensive variant. It will cost the state $11.7 billion.
Spring note
“A difficult choice, because there is no ideal solution,” says Van Rij. One is expensive, the other even more expensive. So the problem is potentially very big. If everyone is compensated, a hole of 11.7 billion will be created in the national budget. And that comes at a time when the government and the House are negotiating the spring memorandum. And it is already plagued with holes and problems. The declining purchasing power, the House’s wish to increase the state pension, to reverse cutbacks in youth care, to invest extra in defence: the cabinet has a long list of expensive wishes and musts.
A difficult choice, because there is no ideal solution
Next week, the House of Representatives will debate the savings tax. Then Van Rij hopes to get a clear picture of how high the bill is that he will bring to the negotiating table about the spring memorandum.
In order to anticipate the problems in the future, urgent legislation is being prepared for the tax years 2023 and 2024 that should resemble the new system for levying capital. This should come into effect in 2025, when the old savings tax with fictitious returns will be replaced by a ‘capital growth tax’, as Van Rij has called it. In addition, tax is simply levied annually based on the real profit made between January 1 of that year and December 31.
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