Dutch told to limit mortgage relief

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The generous mortgage-interest relief offered Dutch tax payers distorts the economy and should be reduced, according to an International Monetary Fund report published on Monday.

The IMF economists argue that the generous tax breaks for Dutch home owners encourage banks and lenders to take unnecessary risks. They say the government should gradually reduce the amount of mortgage interest that can be deducted from tax.

The economists believe it would help if the government delivered a “quick and credible message” on the subject.

In response, Finance Minister Jan-Kees de Jager says he isn’t in favour of limiting mortgage-interest tax relief. He believes that “house buyers really need stability in the house market at the moment”.

The IMF stresses that structural reforms, such as reducing mortgage-interest tax relief and raising the pensionable age, strengthen the economy without jeopardising economic growth. It says the cuts currently being imposed in the Netherlands, while improving the Dutch government’s finances, will result in economic growth staying below its 2010 level.


© Radio Netherlands Worldwide

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