More part-timers will receive tax concession
The FNV trade union confederation has successfully persuaded the Dutch government to revise the new tax system scheduled to take effect in 2001, which was up for debate in parliament at the end of June 1999. The unions are concerned about employees who work limited hours in part-time jobs and who, under the terms of the plan, would not have been eligible for a new annual tax exemption of NLG 1,500. The government has now extended the concession to a much larger group.
In the run-up to a parliamentary debate on the issue at the end of June 1999, the FNV trade union confederation argued that a new tax system planned by the government should take account of employees who work limited hours in part-time positions. With the revised tax system, which is due to take effect from 2001, the government hopes to control labour costs and increase the country's ability to compete in the global market. The new arrangements should also create job opportunities and spell an end to the special deductible items through to be utilised too frequently in the professional services sector.
The government's proposal to award all employees earning at least 70% of the minimum wage (NLG 1,600 gross per month) an annual tax credit of NLG 1,500 raised the subject of part-time employees who work limited hours. FNV informed the cabinet that the scheme actually meant that some 400,000 employees would earn less as a result, in particular part-time female employees with children. The measure would have contradicted the prevailing government policy of increasing the economic independence of working mothers. The government's intention had been only to exclude students with a job on the side. The consequences outlined by FNV were taken seriously by the government, which was concerned about these part-timers resigning as a result of the new rules. The eligibility threshold for the break offered under the new tax system has thus now been lowered from 70% to 50% of the minimum wage
Annual tax revenue losses resulting from the revision have been estimated at NLG 300 million. The cabinet plans to compensate for this by imposing environmental duties in areas like waste processing and by increasing the price of pesticides.
The change proposed by FNV was one of a few revisions approved by the cabinet. Lowering the rate for the top bracket in the tax system was another matter open for discussion, but this will remain at its current level of 50%.