The only positive thing about last weekend, says CDA member Marnix van Rij, was that Feyenoord beat Ajax. The State Secretary for the Tax and Customs Administration does not want to say more about the unrest that has arisen in his party after the resounding defeat in the provincial elections last week, and what the further contraction means for the stability of the coalition.
Yet the electoral beating has an unexpected benefit. It is “not intended to be cynical”, says Van Rij during a conversation in his office, but with a divided Senate, there is little chance that the Tax and Customs Administration will have to implement major policy changes in the near future. And Van Rij can really use that breathing space.
The Tax and Customs Administration is in a critical state, outlined NRC the past months. For example, the service is struggling with large-scale overdue maintenance of crucial ICT systems, which threatens to jeopardize tax collection within a few years. As a result, the government can hardly introduce new fiscal policy. Solving these problems is made more difficult by structural shortages of personnel, which means that services to citizens are also coming to a standstill.
As a tax advisor, Van Rij, now 62 years old, has been explaining to clients how to navigate the often complicated Dutch tax legislation for thirty-five years. In this new phase of his career, Van Rij – who, as an active CDA member, was previously also party chairman, municipal councilor, alderman and senator – must get the Tax and Customs Administration back on track. On Thursday he will debate the state of the service with the House of Representatives.
Marnix Van Rij, as it turns out during the conversation with NRC, sees light at the end of the tunnel. It will take a few years, but then the Tax and Customs Administration will really be ‘ready for the 21st century’.
Has the Tax and Customs Administration been neglected by your predecessors?
“Well, I can really only speak for myself. I do spend a lot of time on the service. Has that happened in the past, when there were also major problems? I don’t think to the same extent. But I have no value judgment on that.”
The core of the problem, says Van Rij, is the modernization of the ICT systems that has been delayed for years. “IT is part of the core business of the Tax and Customs Administration. But politics has not seen it that way for a long time. Of course you are in politics to come up with big prospects and to make new policy. But as long as you only do that, you cannot modernize ICT. And that is precisely essential.”
Many politicians do not find the implementation of policy particularly interesting.
“That’s right. as party chairman [van 1999 tot 2001] I have already noticed that politicians measure their success by how many parliamentary questions they have asked, how many motions they have tabled and how many own-initiative bills they Official Gazette had received. The question ‘does it work?’ was less interesting.”
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The fact that ICT systems are of vital importance to the Tax and Customs Administration has apparently not dawned on the cabinet over the past ten years. Now it is?
“I say it consistently, so that message has arrived. I also get support for it. That is why we said last year that we could not compensate for the higher energy prices via the tax authorities.”
You already discussed with Prime Minister Rutte last summer that tax proposals from the coalition agreement were not feasible. Did the negotiators not know that during the cabinet formation?
“I was not involved in those negotiations. But in essence, that information was known to the Tax and Customs Administration during the formation. There is no other way. And I think that the service also told the negotiators that.”
Then awareness about the state of the Tax and Customs Administration was not so well developed, was it?
“Well, not then. It might also be one uphill battle which I feed. But I have to be honest and realistic. There are more things in the coalition agreement that make me think: okay, what does it actually say? For example: real returns must be taxed. If I then ask: ‘have you discussed what a real return is?’, the answer is: no, not at all.”
The coalition agreement also states the ambition to simplify the tax system. How are you doing?
“It sounds good, but I also asked: what does it mean? Well, nobody knows that. I will come up with a proposal in June. Then we will see how straight the backs are.”
There are more things in the coalition agreement that make me think: okay, what does it actually say?
Can you already say something about that?
“We want to review all tax arrangements. If they are not effective, we will see whether we abolish them or downsize them.”
That sounds more like an optimization of the current complex system than the radical simplification that many people advocate.
“That’s right. But it is a necessary first step. Motor vehicle tax, for example, is teeming with exemptions, partial exemptions and lower rates. I want to delete that. For example, people who have a motorhome may pay more tax. That’s not going to be fun. But I’d like to have that debate. There is a whole list.”
Simplifying the existing regulations is “a great ambition,” says Van Rij. Together, these schemes are worth 140 billion euros, with the service collecting a total of 366 billion this year. Any change can count on resistance.
“When I wanted to cancel the fiscal old-age reserve, things immediately became complicated. Entrepreneurs can deduct part of their profit and use it to arrange an old-age provision. But that provision was overused as a way to get a tax deferral.”
Who found that complicated?
“Well, this affects entrepreneurs in small and medium-sized enterprises… so the parties that stand up for entrepreneurs. VVD, CDA and SGP, I believe. In every debate I have to say: wait a minute, we agreed on this. And that’s just one example. The abolition of the income-related combination tax credit also became complicated. Or the BPM exemption on delivery vans. I said somewhat defiantly to the House: if we want this, we must have a straight back. Nothing is easier than saying at the last minute: I think share interest X is so important. Then it won’t work.”
Is scrapping a number of tax schemes not more symptomatic than a solution to the service’s structural problems?
“I don’t think it’s treating the symptoms. But are you tackling things at the root? No. That should also happen, the system is now much too complicated. I visit all kinds of places and see how citizens sometimes get entangled in that web. That is of course awful. But I don’t see making decisions about major reforms happening during this government’s term of office. We will, however, submit a number of scenarios for this simplification as input for the new election programs and a subsequent cabinet.”
So you are actually saying: my successor must reform the tax system. But so did your predecessors.
“I understand the feeling that there is no progress. But once we have the ICT systems in order, ideally by 1 January 2026, they will be much more flexible and can therefore be adapted more easily to new policy. Then you would have to decide what the new system will look like with the next formation and also implement that. You no longer have the argument that you cannot reform because the ICT is not in order.”
It was already known in 2014 that systems for sales tax were in serious need of replacement. The Tax and Customs Administration would build something new for 2017. It did not work. Six months ago you decided to buy a new system, but a tender has still not been issued. A glacier moves faster.
“Let me be very straightforward: I think it is taking much too long. It also shows that the vision has long been: we do it all ourselves. Now the decision has been made to buy it in the market. Is it taking too long? As far as I’m concerned, it can always be a lot faster.”
Time and time again, internal deadlines are not met. The modernization of the ICT systems for payroll tax suddenly turned out to be delayed by a year. You only heard that when the time had come. What does that tell you?
“From day one I have said here: bring the worst news immediately. Wherever you are in the organization, don’t be afraid to speak up if something is not going well or is slowing down. You shouldn’t have a culture of fear.”
Was it there then?
“Well… This message was necessary. If you are too long beating around the bush does, that’s not good. That is why you also have to name things yourself, such as recognizing institutional racism. At the same time, people who raise problems must be able to trust that this will not have any personal consequences.”
It will take a few years, but then the Tax and Customs Administration will be really ready for the 21st century
Breaking through such a culture is difficult. How far is the service with that?
“Something like this never happens overnight. I have no illusions that I will be the major culture changer in two years, but I do have the ambition and the confidence that it is possible.”
Is new tax policy actually still possible, given the state of the Tax and Customs Administration?
“Simple changes are certainly still possible. If you think that corporate income tax should be lowered, or that capital should be taxed higher, that is possible, for example. But major legislative operations are really not possible during this government’s term of office. The reform of box 3 is a good example. The House will debate it on May 9. Then we need to agree on the bill. Not only within the coalition, but really broad support is needed. You are not going to push through a new system for taxing wealth.”
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Is implementation on 1 January 2026 feasible?
“To be very honest: if the bill is there this summer, and we also want to do an internet consultation, and if you then allocate a year and a half for the legislative process, it will be very complicated to achieve 1 January 2026. Because you also need a year and a half for the implementation.”
So will it be a year later?
“Yes, there is that chance.”
The political turmoil currently revolves largely around your own party. You talk about the 2025 budget, but how do you view the coming days?
“The first year of this cabinet has not been rewarded by the voters, while everyone has gone to work. When the war in Ukraine started, we took firm decisions to curb inflation: with the energy surcharge, the reduction of excise duties and VAT. We have formulated ambitions about the climate and the nitrogen dossier.
“The one thing we may have forgotten for a moment is to ask ourselves if we have a coherent story. Let’s also look back a bit, will the people also come along? Well, the voter gave us a signal last week.”
A version of this article also appeared in the newspaper of March 23, 2023