The low VAT rate of 9 percent is inefficient in achieving the set goals and the scheme is also expensive. This is the conclusion of the research bureaus Dialogic and Significant Public in a report commissioned by the government evaluation report.
By granting a low VAT rate, citizens should be encouraged to buy certain products or services and the tax burden for people with a small wallet should be reduced. In addition, the measure must help combat the black market and certain sectors must be supported with it. Lower VAT is levied on food, medicines and cultural goods and services, among other things.
But according to the researchers, the low VAT rate introduced in 1969 is “not an effective instrument to achieve the intended goals”. For example, the richest half of households benefit “twice as much from the reduced VAT” as the poorest 50 percent. “The more wealthy a household is, the more (!) it benefits from the reduced VAT”.
While the goals are hardly being achieved, the low VAT rate is very expensive. The treasury is expected to lose more than 13 billion euros in tax revenue this year due to the reduced rate. The general VAT rate is currently 21 percent.
The researchers advise the government to take a critical look at whether the goals of the low VAT rate are still relevant and whether there are targeted measures that work better, such as income tax reductions or subsidies. State Secretary Marnix van Rij of Finance (CDA) will study the report and will present a response on behalf of the cabinet before Prinsjesdag.