The low 9 percent sales tax rate does not make the government hopeful for many products and services. Money that the government loses in tax revenues may be better invested in certain situations. This is the result of the work of two independent research institutes commissioned by the government.
For example, a low food and water tax rate has a tax-reducing effect on the ‘rich’, but these income groups benefit relatively less than higher income groups because of their lower spending behavior. By another measure, the government can better assist the lower income groups.
For example, due to the lower VAT rate on culture and books, researchers cannot determine in any way whether the desired goal has been achieved. Supporting the tourism industry with low VAT on museum tickets may be successful, but researchers can’t say for sure.
The low target of more than 9 percent more jobs for hairdressers, shoemakers and bike mechanics, for example, likely won’t be met, the researchers say. You may not see the other intended effect, less informal workers in certain sectors.
Value added tax (VAT) is synonymous with sales tax that entrepreneurs must declare. The Netherlands accepts a standard rate of 21 percent VAT on goods and services.
This means that only 9 percent VAT is charged on some products and services. This is designed to reduce the tax burden on low income earners or to encourage the purchase of these products and services. The low VAT rate will “cost” 10 billion euros in 2020.
oat milk, vegetables and fruits
This research is disconnected from the discussion of eliminating low VAT on fruits and vegetables altogether because of their alleged health effects. Meanwhile, the “Fruit and Vegetable Study” also revealed that especially high income earners benefit from this measure as they spend relatively more money on fruits and vegetables.
The government’s intention to make lemonade (which may also include plant-based dairy products such as oat milk) more expensive is not directly related to this comprehensive sales tax assessment. With this plan, the cabinet is targeting more tax revenues, around 300m euros per year, not health impact.
It is not yet clear what the government will do with all the investigations and tax proposals. Finance Minister Van Rij wants to make a decision before summer.
Source: NOS
Emma Fitzgerald is an accomplished political journalist and author at The Nation View. With a background in political science and international relations, she has a deep understanding of the political landscape and the forces that shape it.
