If we compare this sector with other European Union countries, it is striking that the Netherlands has a large collective sector, the resources of which are spent mainly on health care and social security expenditures. In other countries, these expenditures are much lower and the government spends more on a stronger economy by stimulating business investment. As a result of high social spending, the Netherlands also falls in the leading European group of countries with a high collective tax burden (the sum of taxes and contributions paid by companies and citizens). In part, this is due to the aging of the population in our country, and this pressure is increasing and soon he will be unable to bear it.
Business investment
Many European countries choose to boost commercial investment in addressing the Corona crisis and the recovery of the economy. For example, this week the British government launched a financial super-deduction for corporate investments to get the UK out of the crisis.
So we run the risk that our companies and our investors will choose the much lower tax burden in the UK. Other European countries are already working to successfully attract Dutch companies by offering them tax benefits and other facilities. The UK’s tax action plan is likely to intensify this battle for the majors.
New locker
The economic recovery policy of other European countries will certainly have consequences for the cabinet policy of the new coalition. Last Monday, the Central Planning Bureau (CPB) published an economic analysis of the election programs, charting the economic impacts and budget options. In this alleged account, political attention is mainly focused on the programs of the left-wing parties, PvdA, GroenLinks and the SP. These parties would like to participate as a left bloc with at least two parties in a new government, but in a coalition that would pursue a fundamentally different policy from Rutte III. The essence of this left-wing politics is greater government, less inequality, and additional burdens on companies and on higher income and wealth.
In light of the polls, there is a good chance that he will lead negotiations for a new coalition by VVD leader, incumbent Prime Minister Mark Root. Partly on the basis of calculation, in this column we explore the left-hand locker opportunity in which the left block shares.
Huge differences
Between the current largest government parties the VVD, the CDA, the D66 and on the other left, there are fundamental differences about future fiscal, economic and social policy. For example, the left chooses to achieve strong growth in government social spending as well as job growth in the public sector. This should be funded mainly by a massive increase in the burden on the business community.
On the left, public spending should increase significantly in the period 2022-2025 (compared to 2021). The main expenditures are related to social security, care and education. SP is spending € 15 billion on Social Security, GroenLinks € 11 billion and PvdA € 9.5 billion. In healthcare, SP is the champion with more than 22 billion euros, followed by PvdA with 14 billion euros and GroenLinks with 12 billion. In education, GroenLinks is spending nearly 10 billion euros, PvdA is 9 billion euros, and SP is more than 5 billion euros.
If we compare these left-wing expenditures with the electoral data expenditures of the current largest factions of the government, we see that they are spending much less. For example, D66 proposes to even cut Social Security by more than 4 billion euros and additional healthcare expenditures in the aforementioned groups range from 8 to 9 billion euros. Given the enormous differences, the left-wing bloc in this region will only be able to come to an agreement if it swallows up its proposals almost entirely.
By focusing so heavily on “hard-left” politics (the term is a nickname for the green left), left-wing negotiators risk being sidelined very quickly in negotiations for a coalition agreement.
Appalling increased burden
The most striking difference between left-wing and Rutte III is the massive left-wing tax increase (additional taxes and social security contributions) for companies. While many companies are in danger of falling as a result of the Corona crisis, PvdA proposes an unprecedented increase of 42 billion euros, 24 billion Syrian pounds, and Groenlinks of nearly 13 billion euros.
PvdA and SP in particular are completely out of control here and ignore the dire consequences, also for our international trade. This is a primary source of income for our treasury. Additionally, our exports create nearly 2.3 million full-time jobs, mainly in the corporate sector. In the current internet age, these international companies can often relocate relatively quickly to other European Union countries at much lower costs. Recent numbers already show that companies and investors prefer less than the Netherlands.
Also additional burdens on citizens
The left-wing tax increase will affect all households; It leads to higher prices. In addition to these negative consequences, it is also remarkable that the left is choosing larger government and jobs in (quasi-governmental) institutions. In light of widespread criticism of the performance of these institutions, for example in health care, tax authorities, and employment projects, questions should be asked about this left-wing option.
Moreover, this leads to job displacement in the business community. Decreased employment opportunities in companies at the expense of innovation and economic renewal. In other European countries, we are also seeing a trend towards a greater role for government, but there is an emphasis on increasing collective spending that strengthens the economy. For example, there is a public-private partnership in which profitable investments are selected, for example in physical and digital infrastructure, in new technologies and innovative climate investments.
The new government should make this choice as well. We consider the probability that two left-wing parties will be part of this is less than small.
Willem Firmind is an online entrepreneur and part-time professor of economics at The Open University. He was a minister of state and a minister. Rick van der Bleuig is an economist and former Minister of State, and is currently a professor at the University of Oxford and Victoria University.
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