A future-proof fiscal system

 

In our eyes, the Dutch fiscal system needs a major overhaul. The current fiscal system does not contribute to sustainable economic growth, innovation and employment. Currently there is hardly any discussion on how the tax system can play an enabling role by creating the right conditions for future-proof economic growth. DSB is making sure the subject is put on the Dutch political agenda.

The current fiscal system doesn’t take societal challenges such as climate change into account. The biggest problem comes from the fact that external effects are not internalized into products or services. In other words, the polluter does not pay for activities with a negative impact, but rather people, other companies and/or the environment do. This leads to resource scarcity, pollution, loss of biodiversity or climate change. The current fiscal system does not facilitate the transition to a circular economy, since virgin material use is cheap and the use of products as services is not sufficiently encouraged. An improved fiscal system should additionally encourage manual labour (in refurbishing, remanufacturing, repairing and maintenance) by lowering labour taxes.

In order to shift to a sustainable economy a tax shift is needed: lowering taxes on labour and increasing taxes on resources, energy and mobility. In our tax manifest (in Dutch) we give 15 suggestions for a better fiscal system. These suggestions include adaptations of the VAT, energy taxes and mobility taxes. Another constructive view on a future-proof fiscal system is outlined in the report “New plan. Fiscal reforms for an inclusive, circular economy” of The Ex’Tax Project.

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