How to reform a system that facilitates tax avoidance and fosters inequality?
Can we call the Netherlands a tax haven? What measures can we take to battle tax avoidance? Should we shift the tax burden from labor to capital? These were some of the topics addressed by Dutch politicians during the Make Tax Fair Again Election Debate on February 12, organized by Tax Justice Netherlands and De Balie.
During the debate, moderated by journalist and economist Esther van Rijswijk; Henk Nijboer (PvdA), Steven van Weyenberg (D66), Arnold Merkies (SP), Martin van Rooijen (50Plus) and Tom van der Lee (GroenLinks) discussed their perspectives on fair taxation and how their political parties want to achieve it. VVD and CDA were also invited but decided to turn down the invitation.
© 2017 Jan Boeve
Cooperation as key to success
While not everyone felt comfortable using the term ‘Tax Haven’ to describe the Dutch tax system, all parties agreed that the current system facilitates tax avoidance and fosters inequality. In this system, the Dutch government offers multinational organizations many tax benefits. As a consequence, both the Netherlands and developing countries miss out on tax income. International cooperation, and particularly at the EU level, is seen as a necessity to fight tax avoidance by multinational companies. Even Eurosceptic parties such as 50Plus and SP seemed to agree on the issue. Surprisingly, 50Plus stood by the predominantly left-wing parties and expressed their support for a minimum corporate income tax at a European level. Before, 50Plus had been reserved in supporting measures at this level.
“Trying to fight globalization individually (….) in practice this means that you dance to the tunes of big corporations. You will hollow out democracy in your own country” [translation] – Tom van der Lee (GroenLinks).
The participating parties together took a critical stance towards the current tax system, agreeing that tax rates for larger corporations should be raised. What remained a point of discussion, however, was who would benefit from the financial gains resulting from the implementation of this measure. D66 proposed investing the gains into both businesses and society by lowering the social charges for corporations. PvdA called this ‘morally perverse’, as it would reward companies that in the past engaged with tax avoidance practices. According to PvdA, everyone should benefit equally from the financial benefits, suggesting that the money should be invested in education and infrastructure.
© 2017 Jan Boeve
The fourth box
Poet Sjors Talsma closed off the debate, proposing an original solution to the problem of tax evasion. In his poem he suggested adding a fourth tax box (next to employment income/house ownership, substantial interest, and savings and investment): conscience. “A tax on immorality, a refund for modesty.” Perhaps this best summarizes the fight against tax inequality: it is up to all of us to take our responsibility and address tax evasion as immoral behavior. This debate was a step in the right direction, providing fruitful ground for cooperation between the participating parties.
The debate proved to be worthwhile in the following days. In the debate, 50Plus not only expressed its support for cooperation at a European level but also publicly gave their approval for a motion, put forward by Arnold Merkies (SP), which states that the Second Chamber should not postpone tackling the problem of so-called hybrid mismatches until 2024. Hybrid mismatches can be described as the arrangements that exploit differences in the tax systems of countries in order to pay little to no taxes. Two days after the event in De Balie, the motion was discussed in the Second Chamber and accepted, with the support of 50Plus, a party for which tax evasion had never seemed a priority in the past.
Tweet by Arnold Merkies (SP): “Chamber does not want postponement of tackling hybrid mismatch tax routes. Motion has just been accepted. Cabinet wanted postponement until 2024.”
The debate on the 12th of February was not a debate on the very existence of tax evasion nor the gravity of the situation. It was a discussion about how to turn the tide. It was a debate that made politicians step up against the immoral behavior of tax avoidance.
Yvette Hogenelst is communications and campaigning intern at the Governance and Financial Flows Department of Oxfam Novib.