Plan to increase value-added tax on hold
The government’s plans to increase value-added tax (btw) as part of its tax reform programme are unlikely to become a reality because a key potential partner is opposed.
Ministers need the support of opposition parties to ensure the changes are approved in the upper house of parliament but the left-wing greens GroenLinks have now said they do not support the increase.
GroenLinks, D66 and two minor religious parties had agreed to work with the government on putting together an acceptable package of reforms.
The party’s new parliamentary leader Jesse Klaver says he supports making the tax system ‘greener’ rather than raising btw to 21% on all but food. Retailers and small firms have already said the increase from 6% will hit them particularly hard.
‘Increasing btw is a blunt measure with a lot of undesirable side effects,’ Klaver is quoted as saying by the Volkskrant. ‘It will make public transport, medicine, culture and labour-intensive trades such as cleaning, tailoring and repairing bikes much more expensive.’
The government has drawn up a three-pronged approach to tax reforms. The first concentrates on lowering income tax, the second on increasing btw and the third on giving local authorities more tax-raising powers.
Ministers and the four opposition parties are due to discuss stage two on Thursday.