In his letter to parliament Finance Minister van Ruy called the low VAT rates ineffective. The Minister said that the purpose of reducing these rates is to reduce the burden on low-income residents of the Netherlands. However, the wealthier segments of the population are the main beneficiaries of the reduction in value added tax. Thus, according to the results of the study, the 50% of the wealthiest households receive twice as much benefit from the VAT reduction as the 50% of the poorest households. To make life easier for the poor in the Netherlands, according to the Minister of Finance, should be done in other ways, in particular through targeted assistance to such people or producers of goods and services for them.
Based on the results of a government study, it is proposed to revise the reduced VAT policy. It is noted that the lists of goods and services taxed at a reduced rate were compiled decades ago. These lists need to be rechecked and the policy adjusted.
Concrete proposals of the government on this issue, van Rui promised to submit the Prince's Day (Prinsjesdag). On this day, the Netherlands announces the tax rules for the next year. In 2023 Prinsjesdag falls on September 19th.
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Publication Date: 18.04.2023
