How much proof that the tax system is due for a thorough review do the cabinet and the House still want to see?
How much do workers have left of every euro they earn extra? The rapidly mounting concerns in the House of Representatives about this ‘marginal pressure’ deserve some perspective. The cause for the fuss is mainly the table with the figures for single earners with children. This showed on Budget Day that they will have very little left over from an income of 34 thousand euros if they start earning more, because on the other hand their allowances and tax credits are quickly phased out.
However, this group is not representative. The picture is much less dramatic for dual earners. Across the board, the marginal tax, like the general income tax, still simply complies with the principle that the strongest shoulders bear the strongest burden, as the House of Representatives would like it to be.
This does not alter the fact that there is of course a social problem if people, especially in times of major personnel shortages, start to doubt whether extra work pays off. The quickest solution to the shortage is if the army of part-timers decides to put in some extra hours. That won’t work if it doesn’t make any financial sense.
This is where many years of accumulated good political intentions take their revenge. When the current tax system was introduced at the beginning of this century, it had the charm of simplicity. After that, each governing coalition added its own wishes, up to the point reached years ago: the system, with all its allowances and deductions, is rotten, too complicated and contributes too little to employment. Labor is overloaded and wealth and pollution too light. For the executor, the Tax and Customs Administration, it is no longer possible to do this.
The fiscal chaos that had already been observed at the time was the reason in 2009 for the Balkenende IV cabinet to want to build a new system. A detailed proposal was submitted by the Van Weeghel Committee. Rutte I ordered a second complete plan in 2012. That was also the case, from the Van Dijkhuizen committee. Two stacks of practical proposals that can be implemented in this way.
The second Rutte cabinet toyed with the idea of doing it in 2015, but decided not to burn its fingers. The consequences for the taxpayer would be too drastic and the overloaded tax authorities would not be able to handle it, VVD and PvdA reported.
That pretty much summed up the vicious circle and little has been heard about it since then. Yes, D66 and the ChristenUnie made valiant attempts in their election programs to design a new system, but did not get the VVD and CDA to join in the formation. In the meantime, this cabinet has made things even more complicated by all the purchasing power compensation for the increased energy bills.
No one is claiming that a tax reform is easy. This requires years of preparation and billions of euros in lubricating oil to mitigate unwanted income effects. But nothing prevents the cabinet from putting thought into action in any case. If only to have something in the pipeline at the end of this cabinet term, so that the country can vote on it and the next cabinet can introduce it. Simply, as big decisions were often made in the past.