Many politicians argue, especially during election periods, that work should be rewarded better. However, the question is how they intend to do that, and where they are going to get that money from. Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics, casts his eye on this topic in an article by EenVandaag (21 November 2023).
The solution to rewarding labour more consists of two measures: cut taxes on labour and make benefits less income-dependent. These plans, however, do not come without a cost: Kavelaars estimates that it would cost around 30 billion euros to implement. That money has to come from somewhere. 'And that hurts anyway, because it causes you to raise another tax,' Kavelaars added.
One possibility is to increase the tax on consumption. Although shopping will then be more expensive, your net income will also be higher. It is also possible to increase taxes on environment and energy or capital income. 'Increasing environmental and energy taxes frees up a large amount that you can use to reduce the pressure on labour. You then have to take into account resistance from business,' the professor concludes.