On Wednesday 31 August 2022, Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics, reflected at BNR Newsradio on the new purchasing power package of the cabinet and coalition parties VVD, D66, CDA and ChristenUnie. Especially the faster introduction and substantial increase of the minimum wage is striking.
The purchasing power package consists of incidental (one-off) expenditure and structural (long-term) expenditure. Examples of major expenditures are an increase in the healthcare and rent allowances and tax breaks for the lowest incomes. To compensate for these expenditures, the cabinet is raising the profit tax, so that profits are partly used to strengthen the purchasing power of those on lower incomes, according to the professor.
Yet Kavelaars casts a critical eye on the package. By necessity, the cabinet and the coalition parties have had to collect 100 million euros. However, according to the professor, the way in which this was done was the wrong choice: instead of collecting the money in Box 3 (savings and investments), it would have been better to save it by reducing the decrease in the rate of Box 1 (work and living). Finally, Kavelaars questions the increase in the work bonus. It is true that this leads to more employment, but in the present, there is absolutely no lack of employment in the Netherlands. The Cabinet and the coalition parties would have done better if they did something about the general tax credit, according to the professor.
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You can listen to the full interview from BNR Nieuwsradio, 31 August 2022, here.
