'Millionaire tax' dispute leaves Dutch government on brink of collapse

Detailed summary

The Dutch government is in crisis after a proposed "millionaires’ tax" exposed such deep divisions that the three-party coalition is at risk of crumbling after less than nine…

The Dutch government is in crisis after a proposed "millionaires’ tax" exposed such deep divisions that the three-party coalition is at risk of crumbling after less than nine months.

Parties bickered over a deal with the left-wing opposition to support a 2027 tax plan in exchange for ⁠an increase of wealth taxes. The lower house of the Dutch parliament narrowly passed the left-leaning bill – which would shift the country’s tax burden from income to wealth-related measures – late on Thursday, after Prime Minister Rob Jetten’s centre-left D66 party and the Christian Democrats teamed up with left-wing opposition groups.

The conservative People’s Party (VVD), the third group in the governing coalition, threatened to quit if the measure passed.

Mr Jetten, who in February became the youngest prime minister in Dutch history at age 38, will try ⁠to save his minority government in a ​meeting with coalition partners on Friday.

Following the vote, the party’s politicians said they needed more time to decide the next steps regarding the legislation, which still needs to pass the upper house before it becomes law.

VVD leader Ruben Brekelmans said the result of the vote was "disillusioning" and would force his party to seriously reconsider its position. “I’m going to consult thoroughly with my party and my caucus first,” he told Dutch broadcaster NOS. “I’m not going to jump to any conclusions.”

The controversial element of the legislation has been called the "millionaires’ tax". It proposes taxing returns on assets above €60,000 ($66,555) a year at 38.5 per cent, among the highest rates in the euro region. The rate below the threshold would drop to 35.5 per cent. That rate is 36 per cent currently, regardless of the amount.

The bill would also crack down on efforts to avoid inheritance taxes through so-called paper gifts, when money is legally given but not transferred.

According to projections from the parties supporting the amendment, the budgetary impact of the proposal would shift…

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