If you thought figuring out your Dutch taxes was complicated, spare a thought for the Dutch government. It seems even the people in charge of collecting them haven’t quite figured things out.
The Jetten I cabinet is once again on the brink of collapse, and this time, the argument is over who should pay a little more tax. Or, more specifically, whether the country’s millionaires should contribute a little more so that ordinary working people can pay a little less.
What should have been a fairly straightforward discussion about the 2027 tax plan has turned into yet another spectacular episode of political infighting, bruised egos and coalition partners threatening to walk away.
So, what’s actually happening in The Hague?
First, a quick reminder: who is actually running the Netherlands?
The Jetten I cabinet is a minority coalition consisting of three parties: D66, the VVD, and the CDA. Led by Prime Minister Rob Jetten, the government has just 66 of the 150 seats in the Tweede Kamer (House of Representatives).
READ MORE | The new Dutch cabinet just dropped: here are the ministers of ‘Jetten 1’
That means it needs support from opposition parties to get legislation through parliament. Not exactly an ideal starting point when your coalition partners can’t even agree with one another.
The government’s difficulties have been particularly obvious during negotiations over the 2027 tax plan. Months of discussions failed to produce a proposal that could secure sufficient support, with disagreements between the parties dragging on and on.
Eventually, the coalition parties agreed that they could, in certain circumstances, vote differently from one another. In other words, they would be allowed to look for support from opposition parties on either side of the political spectrum, rather than having to vote as one united bloc.
And, remarkably, this actually worked. Well, at least for two of them.
Enter the millionaires’ tax
D66 and the CDA joined forces with opposition parties PRO and Volt to reach a compromise on the so-called millionaires’ tax.
The proposal would raise approximately €1 billion from wealth and use most of that money to reduce income tax for working people. The idea is fairly simple: shift a little of the tax burden away from labour and towards those with substantial wealth.
And before you get too excited, we’re not talking about someone who has a decent savings account and a second-hand Volkswagen parked outside.
The proposed higher tax rate in Box 3 would apply to investment returns above €60,000 a year. The top rate would rise to 38.5%, compared with 35.5% for lower returns. In practical terms, this could affect investors with around €1 million in assets, or people with approximately €6 million in savings, depending on their returns.
Neither category is particularly familiar territory for most of us. Unfortunately.
The agreement also includes measures targeting tax avoidance through paper gifts and other wealth-related tax arrangements.
The overall aim is to raise more money from substantial wealth while reducing the tax burden on employment. It is a watered-down version of the original PRO and Volt proposal, which aimed to raise €1.5 billion.
For D66, the CDA, PRO and Volt, it was a political breakthrough. For the VVD, however, it was apparently something approaching a declaration of war.
Why is the VVD so furious?
The VVD, the right-wing liberal party that traditionally champions businesses, entrepreneurs and lower taxes, was not amused.
Its main objection is that D66 and the CDA negotiated the agreement with opposition parties without securing the VVD’s approval. The party argues that the proposal goes against the coalition agreement and could damage the Dutch business and investment climate.
But there is also a rather more political dimension to this whole affair.
The VVD has spent years positioning itself against higher taxes on wealth and has been particularly reluctant to give the left-wing opposition any political victories. The fact that D66 and the CDA managed to strike a deal with PRO and Volt, effectively bypassing their own coalition partner, clearly struck a nerve.
VVD parliamentary leader Ruben Brekelmans described the situation as deeply disappointing and said a fundamental discussion about the future of the coalition was necessary.
His party even threatened to vote against the entire tax plan if the amendment went through. And that’s precisely what happened.
The tax plan passed, but the government is in trouble
On Thursday, November 12, parliament finally voted on the controversial tax plan.
Despite the VVD voting against its own government’s proposal, the legislation passed the Tweede Kamer by 76 votes to 74. D66 and the CDA secured support from PRO, Volt, ChristenUnie, DENK, the Party for the Animals (PvdD) and 50PLUS.
So, technically, the government got its tax plan through parliament. But politically, things couldn’t have gone much worse.
A governing coalition normally expects its own parties to support its central legislation. Having one of your three coalition partners actively vote against the government’s tax plan is quite an extraordinary situation.
And it raises a rather obvious question: if the three parties cannot agree on something as fundamental as the country’s taxes, how exactly are they supposed to govern together?
To make matters worse, the tax plan still needs approval from the Eerste Kamer (Senate), where the government also lacks a majority. So even getting it through the Tweede Kamer doesn’t mean the whole saga is over.
Will Rob Jetten have to resign?
That’s the big question in The Hague this Friday.
Prime Minister Rob Jetten has acknowledged that the coalition needs a serious fresh start and has called for discussions with his two deputy prime ministers, representing the VVD and CDA.
The VVD, meanwhile, has refused to rule out any options. That could mean continuing with the current coalition under new arrangements, exploring a different political combination or potentially bringing the government down altogether.
If the VVD decides to leave, the Jetten I cabinet would effectively lose its already fragile foundation.
That doesn’t automatically mean another general election, though. Dutch political parties could attempt to form a new government using the existing parliamentary seats. However, finding a workable majority in an increasingly fragmented political landscape would be no small achievement.
And elections wouldn’t necessarily solve the underlying problem either.
So, will the Jetten I cabinet survive?
As things stand on Friday morning, the answer is anyone’s guess.
The tax plan has passed the Tweede Kamer, the millionaires’ tax has made it into the agreement, and the VVD is left deciding whether it can live with what its coalition partners have done.
Jetten is hoping for a reset. The CDA wants the government to continue. And the VVD has some serious thinking to do. Meanwhile, the rest of the Netherlands is probably wondering whether its politicians could, just once, get on with running the country.
Perhaps that’s too much to ask.
We’ll be watching what happens in The Hague. And if there’s one thing Dutch politics has taught us, it’s that you should never underestimate the ability of politicians to find yet another complicated way out of a complicated situation.
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