Dutch Coalition Splits Over Wealth Tax in Tax Plan

The Dutch Cabinet is still not sure it can pull together the backing it needs to pass next year's tax plan. A parliamentary debate on Wednesday showed just how divided the governing parties are. At the heart of the row is an amendment from PRO and Volt that would tax the wealthy more heavily. D66 is willing to listen, while the VVD wants nothing to do with it. The stakes are high, because the support of PRO and Volt would hand the minority Cabinet a majority in both the House and the Senate.

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What PRO and Volt Are Asking For
The two parties want to move €1.5 billion of the tax burden away from workers and onto wealth. Of that sum, €180 million would come from scrapping a tax advantage that applies when a business is handed over to a new owner. That is where things get tricky, since the Jetten I coalition agreement clearly says this arrangement stays as it is.

PRO leader Jesse Klaver told parliament he had "gone to great lengths" to shape the proposal. He accepts that income tax for workers will go up, although the amendment would soften the increase somewhat. "It is an attempt to make things fairer," he said. In his view, everyone should chip in, not only people who earn a wage. Klaver added that he is open to talks on the finer details.

A Coalition Split Wide Open
Reactions from the governing parties varied sharply. D66 MP Henk-Jan Oosterhuis said he understands the direction of the plan and signalled that his party is ready to talk. The VVD took the opposite line. MP Wendy van Eijk said it was hard to imagine any coalition party backing the proposal as it stands. She argued that it clashes with the coalition agreement, and that the so-called millionaire tax would hurt the business climate and, with it, the whole country.

The CDA sits somewhere in the middle. MP Inge van Dijk described the proposal as "far-reaching" and could not say whether her party would back it. Her party leader, Henri Bontenbal, had already voiced his unhappiness on Tuesday with the Cabinet "gambling" on finding a majority. He also felt the VVD was being too rigid on taxing wealth.

There is talk of a split vote, too. Van Dijk insisted that this is certainly not what the coalition wants. Even so, insiders suggest the VVD could vote against the wealth tax portion while accepting that D66 and the CDA carry it to a majority. The coalition parties declined to answer questions on this during the debate.

Expect plenty of negotiating over the next few days, and quite possibly changes to the plan. The votes on the tax plan are set for November 12.