Dutch Government Hands Out EUR2.5 Billion In Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

22 September 2005

The Dutch government pledged billions of euros in tax cuts during Tuesday's budget announcement, in a bid to rekindle the slow burning economy and boost its own flagging popularity ratings.

Among the key measures in the EUR4.8 billion economic stimulus package, EUR2.5 billion of which will come in tax relief, is a reduction in the headline rate of corporate tax to 29.6%, starting in 2006, down from 31.5% at present. The corporate tax rate will be nudged down further in the following year under the budget plans, to 29.1% in 2007. Meanwhile, to help firms finance growth more easily, capital transfer tax will be abolished from next January.

Other measures will result in an easing of the tax burden for middle income families with children, whose purchasing power is said to have declined sharply in recent years, contributing to an economic recession in 2003.

Among these personal income boosting measures are the abolition of the user element of the Property Tax, several General Tax Credit increases and a 0.5% reduction in employees' monthly contributions to the government's Unemployment Benefits scheme.

The government is also freezing excise duty on motor fuel at 2005 rates during 2006.

Recommended