Reports of the Dutch Central Bureau of Statistics (CBS) show that municipal taxes will increase once again in 2022. The real estate tax, the sewage charges, and the waste charges are expected to increase throughout the Netherlands. Arjen Schep, Professor of Local Government Taxes at Erasmus School of Law, explains to NU.nl why this increase is so noticeable for taxpayers and what could be the reasons for these increasing taxes.
The municipal taxes are paid directly out of the citizens’ pockets. This is different from taxes like the income tax and VAT, explains Schep: “You don’t see the lion’s share of taxes. Those have already been deducted before you receive your paycheck, or you pay them while you fill your car up with petrol, for example. Taxpayers have to wire local taxes themselves.”
One of the reasons for the rising taxes can be traced back to the policy and the associated expenditure of the municipality. The municipality is authorised to set the rate of most local taxes, which results in a different tax burden per region. Schep: “We elect the municipal council; they make the policies. For example, if the council wants a new swimming pool and there are no funds from the federal government, the municipality will have to use its’ general resources. That could lead to a higher real estate tax, for example.” The budget a municipality receives from the federal government is calculated in advance. Therefore, municipalities do not have many options other than to cut spending or increase property taxes.
In addition to increasing taxes for policy reasons, inflation is also causing an increase in taxation, explains Schep: “It is always the minimal increase one can expect, regardless of the policy decisions by municipalities.”
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Read the entire article of NU.nl here (in Dutch).