The government is looking at the Lower House to close the budget gap of 1.3 billion euros in the sales tax (VAT). In a letter, State Secretary Tjebbe van Oostenbruggen (NSC) lists three options, but he does not give a preferred option or the most promising opportunity. Next week the room will debate the gap on the budget and it must become clear where the money will come from.
The 1.3 billion euros is needed to be able to reverse the VAT increase on books, sports, culture and media. The coalition agreed in the outline agreement for those four categories to change the VAT rate-from the low rate from 9 percent to the high rate of 21 percent-but for that plan the government did not have a majority in the Senate.
The cabinet therefore had to talk to the opposition. In negotiation with D66, CDA, ChristenUnie and SGP, Minister of Finance Eelco Heinen (VVD) promised to come to an alternative to the intended increase in VAT in consultation with the House of Representatives. Partly for this reason, the four parties supported the tax plan for 2025.
Flower bulbs
Van Oostenbruggen, who became a State Secretary in November, first of all reminds him that the old plan can also continue as usual. That is what he calls ‘the Nulscenario’, which comes into view if the House of Representatives cannot agree on a way in which the 1.3 billion euros should be collected. Then “the reduced VAT rate on culture, media and sport will go to 21 percent on January 1, 2026,” writes Van Oostenbruggen.
He then submits three alternative VAT increases to the House of Representatives. The Chamber can choose to shift other categories from the low VAT rate to the high VAT rate. For example, flower bulbs, public transport or medicines would become more expensive. It is also possible to increase the VAT rates yourself-the low or high. The third option would be a combination of the first and the second option.
The possibilities all have their disadvantages. If the low VAT rate rises, it would make the prices of groceries more expensive. Moving other categories from the low to the high VAT rate could again cause dissatisfaction with citizens. And an increase in the high VAT rate does not like the coalition, it turned out last week.
To be able to prepare his letter, the State Secretary first made a round past the four opposition parties and the coalition to make an inventory of what they would like. Last week leaked that the State Secretary saw an increase in the highest VAT rate as a result of this as the most promising option. That option was killed even before Van Oostenbruggen was able to work out his plan further, because coalition parties did not see it. “Nothing of it!” Geert Wilders (PVV) tweeted.
Zercenario
The State Secretary leaves it further to the House of Representatives. Van Oostenbruggen himself, he says after the Council of Ministers, has no preference whatsoever. The cabinet wanted a VAT increase on books, sports, culture and media, he says. The House of Representatives didn’t want that. There the gap was created. How the gap should be closed “is not me,” he says.
After the coalition quarrel about the high VAT rate sounded in the Lower House: the chance of not raising the money with VAT, but with other tax increases. Or by deleting tax benefits. Van Oostenbruggen, however, writes in his letter that the money must be collected via VAT. In the Senate, when he received questions about this from senators, he still mentioned the “starting point” of his search.
The opposition is waiting and hopes that the coalition will present a plan in the debate on VAT Thursday. Member of Parliament and financial specialist Pieter Grinwis of the ChristenUnie still assumes that the VAT increase on books, sports, culture and media will not take place. And what about the Nulscenario? Grinwis brings the promise of Heinen to come up with an alternative. “A man a man, a word a word.”