The House of Representatives agrees on the extent of the problem. “A complicated puzzle, involving billions.” (Inge van Dijk, CDA). “A strong thunderstorm that you saw coming from afar.” (Chris Stoffer, SGP). “A midship torpedo that sank Box 3.” (Pieter Grinwis, Christian Union).
And the government also recognizes the unprecedented damage caused by a recent judgment of the Supreme Court of Tax Collection. “There are no examples of a judgment,” wrote State Secretary Marnix van Rij (Finance, CDA) in his introductory letter to Parliament, “with such major implementation-technical and budgetary consequences”.
On Wednesday evening, more than three weeks after the new cabinet was sworn in, the House of Representatives discussed the first major issue, both political and financial, that has been placed on Rutte IV’s plate.
At the end of December, the Supreme Court canceled the way in which the central government levies tax on the returns of savers and investors. In the tax system that was introduced in 2001, this form of wealth tax falls in so-called box 3.
Billions in damage
Since 2017, this has been done with a differentiated rate for different categories of wealthy, based on a fictitious return. The highest court had previously ruled that this is not lawful. The Supreme Court now ruled that taxpayers who have objected to this are entitled to compensation. The damage will run into the billions.
Not only because the size of the compensation scheme is not yet known – many more people may have to be compensated than the nearly 200,000 people who have objected – also because the tax authorities have stopped the box 3 levy with immediate effect. On average, the tax authorities collect about 4.5 billion euros per year.
The widely shared frustration in the House of Representatives is not only that there is an immense tax problem on the table that must be solved quickly. But also that no party has ever been happy with a tax levy based on a fictitious, i.e. not actually enjoyed return. Politicians have been saying this for years, but no government has succeeded in reforming the offending capital yield tax.
The formula from 2017, introduced by then State Secretary Eric Wiebes (VVD) in the second Rutte cabinet (VVD-PvdA), was intended as an intermediate step towards a system with a capital tax that is based on real returns. The need for this became greater as the interest on savings fell towards zero. From a technical point of view, the Tax and Customs Administration was not ready for that, was the argument of several state secretaries for a long time.
Many parties are now seizing the billion-dollar noose to (again) insist on a fairer way of levying taxes on savings and wealth. Faster than the new cabinet promised in the recent coalition agreement – not until 2025.
ideological debate
As a result, the left-wing opposition turned it into an ideological debate. On the eve of the parliamentary debate, the PvdA, GroenLinks and the SP came up with their own bill to replace the complicated and now banned box 3 levy. direct wealth tax to enter. With a progressive rate – 1 percent for assets up to half a million euros; 5 percent for wealth above 5 million – according to these parties, this should lead to the reversal of the ever-increasing wealth inequality.
Coalition expects billions of noose due to ruling on wealth tax
The coalition parties also feel urged to consider the box 3 fiasco ideologically. For the time being, mainly about the question of how the expected billions of dollars in damage should be paid. D66 MP Romke de Jong repeated that the tax damage must be collected by the Supreme Court ruling “within the property domain”. Inge van Dijk of coalition party CDA agreed. She says she wants to cover the financial problem “with the same type of tax, in this case assets.”
Pieter Grinwis of the ChristenUnie said he assumes that State Secretary Van Rij “will not put the bill with workers without assets, without savings, shares and real estate”. VVD member Folkert Idsinga has not reached that stage yet and said that it is “much too early” to say who will have to pay for the hole in the budget. “I am waiting for the plans of the Secretary of State.”
Nevertheless, the four government factions came up with a motion that was supposed to give the impression that they would be able to work it out together. They urge State Secretary Van Rij to come up with a proposal to restore the taxation of wealth, based on ‘the ability to pay principle’.
Henk Nijboer of the PvdA called it “quite a good motion” and referred to his own bill.
A version of this article also appeared in NRC on the morning of February 3, 2022
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