Economists are not enthusiastic about the tax concession proposed by the government to boost business investments. This job-related investment discount (BIK), which will cost 4 billion euros over the next two years, should financially stimulate employees to invest in spite of the crisis.
To make use of the BIK, companies do not have to prove that they are creating extra work. The investments in question are eligible for deduction of a certain percentage from payroll tax. No matter where these investments are made.
Stimulating investments
The future earnings model is affected by a decline in investments. Bas Jacobs, Professor of Public Economics at Erasmus School of Economics, considers it logical to do something about this with a crisis measure. By tackling the decline in business investment, economic demand will be increased and the damage to Dutch earning power will be limited in the long term. According to Jacobs, the question remains how the government will ensure that the tax rebate will benefit new investments. He argues that it is undesirable to subsidize all investments that would have been made anyway.
Gift for the business world
The funds to facilitate the BIK came from the cancelled reduction of the promised profit tax for larger companies. The BIK will therefore replace the proposed reduction in corporate income tax. This, in turn, was a compensation for the employers, because the abolition of dividend tax was rejected. Nevertheless, there are differences between the measures. Shell and Unilever in particular would have benefited from the abolition of dividend taks, but all companies can benefit from the BIK.
Economists sceptical about state aid financing
BIK, job creator or a company gift
- Professor
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Read more about the job-related investment discount in the articles above of Het financieele Dagblad and de Volkskrant, 17 and 19 September 2020 (in Dutch).
