The Dutch Government has submitted a report to parliament which includes an extensive set of proposals intended to improve and “future-proof” the country’s tax system.
The report is based on the results of 11 investigations into seven “bottlenecks” in the tax regime which lead to unfavorable outcomes. It suggests 169 “building blocks” that political parties could use in future to rebuild the tax system.
According to the Government, the seven bottlenecks include:
- A rising tax burden on labor;
- Tax complexity;
- Ineffective taxation of the platform and gig economy;
- Inconsistent taxation of capital, with some forms of capital income taxed more lightly than others;
- Inadequate taxation of profits;
- Insufficent “pricing” of pollution through taxation; and
- The declining effectiveness of national taxation.
Policy options detailed in the report are intended to better align the taxation of workers, the self-employed, and retirees; tackle tax avoidance; and simplify the tax system.
Additionally, the report proposes that the tax burden should be shifted from labor towards wealth, and that additional environmental taxes should be put in place, in particular targeting the aviation and energy sectors.
Further, the report suggests that a more harmonized European approach to the taxation of profits and environmental taxation could be more effective than national measures in these areas.
However, in recognition of the economic impact of tackling the COVID-19 virus, the report says that tax incentives and support measures may be needed in the short-term.