The Netherlands needs an income tax reform

Sigrid Hemels, professor of Tax Law at Erasmus School of Law, argues in an opinion piece in the Financieele Dagblad that politicians should strive for fundamental reconsideration of the tax system, and that they should not be led by noisy minorities and the pressure of social media.

“The lack of a clear vision makes the tax system susceptible to lobbying, partial interests and proliferation, which is why politicians should strive for a fundamental overhaul of the system,” according to Hemels.

Who is the ideal citizen?

During the congress of the European Association of Tax Law Professors, Czech Professor Michal Radvan spoke about the communist regime's use of income tax to mould the ideal citizen. In the eyes of the socialist utopia, this was a low earning, married worker with many children, without capital income who lived in a small rental flat. Singles, high earners and couples with one or no children were taxed more heavily to discourage entrepreneurship and free speech.

During this congress, Hemels pondered the image of an ideal citizen that emerges from our income tax. “In the Netherlands, this is an entrepreneur, or a manager rewarded with shares, who lives in a house that is financed with borrowed money (preferably from his own private limited company) and who owns rented premises or large share packages. The ideal citizen image does not arise from a clear vision of the Dutch tax system, but precisely from the lack of it,” says Hemels.

A discriminatory tax law

“The result is a discriminatory tax law in which the costs are mainly distributed among tax-paying employees with average incomes. In the Netherlands, it is the task of the parliament to protect these employees, but this does not happen nearly often enough," according to Hemels.

 The problem of the income tax system is now, once again, passed on to the next cabinet. According to Hemels, the Cabinet and Parliament must resist the pressure of social media to arrive at a simple tax law that respects the principle of equality, even if it is a difficult and unpopular task.

More information

Read the full article in the Financieel Dagblad here (in dutch). 

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