The Dutch government achieved an 11 billion euro budget surplus in 2018, equivalent to 1.5 percent of gross domestic product (GDP). However, this is not the time to return money to the taxpayer, says Minister of Finance Wopke Hoekstra. According to Bas Jacobs, Professor of Public Economics at Erasmus School of Economics, it is indeed not a wise idea to immediately reduce the taxes, despite the fact that the budget surplus has not been so large in the past 20 years.
‘In general, it is good to be careful when the economy is doing well, so that you can let it ease when things are going badly.’ Jacobs is also of the opinion that it is not a good idea to reduce the national debt. Because of the low interest rates the Dutch State is currently earning from lending money through government bonds. ‘If the government is going to pay off the government debt, it will lose incomes.’
According to Jacobs, the solution is to invest, for example in education, research or the climate transition. ‘This is the time to implement reforms,’ says Jacobs.
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