According to Aart Gerritsen, Associate Professor at Erasmus School of Economics, the current flat-rate capital gains tax is not sustainable and a tax on actual returns would be both fairer and more efficient. This he writes at the request of the House of Representatives in an academic fact sheet. He presented his findings to the Parliamentary Standing Committee on Finance on Wednesday, 22 January.
Following Supreme Court rulings, the tax system around Box 3 is in flux. The current bridging legislation leads to substantial tax revenue losses and erodes support for the system. Gerritsen therefore advocates a quick and thoughtful reform, learning from past mistakes.
Broad scientific consensus
Ever since before the introduction of the capital gains tax in 2001, economists have consistently warned about the drawbacks of the flat-rate system. A tax on actual returns would better reflect the ability-to-pay principle and lead to fewer economic distortions. Moreover, such a tax is common in other OECD countries, which weakens the implementation argument against such a reform.
Choice between two systems
Within the debate on a tax on real returns, there are two options: a capital gains tax (VAB) or a capital gains tax (VWB). Gerritsen argues that a VAB is economically superior because it prevents tax avoidance via deferral of capital gains and portfolio realignments. This argument supports the bill ‘Actual Return Box 3 Act’, which provides for a VAB as the main rule.
Political will needed
The facts have been on the table for decades, but political action has so far failed to materialise. Gerritsen stresses that it is high time to take science seriously and opt for a future-proof and fair tax system.
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For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics, rdegroot@ese.eur.nl, 06 53 641 846.
For Dr Aart Gerritsen's scientific factsheet, see: https://parlementenwetenschap.nl/wp-content/uploads/2025/01/20250115_Factsheet_Box_3_Gerritsen.pdf.
For a video of the technical briefing, see: https://debatdirect.tweedekamer.nl/2025-01-22/financien/troelstrazaal/toelichting-op-wetenschappelijke-factsheets-box-3-10-00/video.
On Thursday, 23 January, Het Financieele Dagblad devoted an article to the scientific views that Aart Gerritsen and his colleague Peter Kavelaars (Professor of Economics of Taxation) shared with the Parliamentary Standing Committee on Finance. According to the newspaper, these are diametrically opposed. You can download the article in question above.
