Dutch Tax Reform in Doubt After Rutte Loses Senate Majority

The Dutch prime minister may no longer be able to do tax reform.

Dutch prime minister Mark Rutte lost his Senate majority on Tuesday, raising doubts about his ability to keep an austerity program in place and push through comprehensive tax reforms.

The Senate defeat was widely expected after provincial elections in March showed the two ruling parties losing almost a third of their seats in local legislatures. Provincial deputies indirectly elected the new Senate today.

Rutte’s liberals are still the largest party with thirteen out of 75 seats in the upper chamber, down from sixteen. But their Labor allies lost almost half their fourteen seats. The centrist liberal Democrats doubled their delegation.

Left-right coalition

Left-wing voters are disappointed Labor joined Rutte’s right-wing party in a coalition and defected to either the Democrats in the center or the hardline Socialists on the left.

Rutte was forced into a coalition with Labor in 2012 when the two got over 50 percent support together in parliamentary elections. They were just a few seats short of a majority in the Senate and formed an informal alliance with the Democrats and two small Christian parties to make law.

As a result of Labor’s poor showing, the five-party coalition is now two seats short of a majority as well. The government will probably look to the Christian Democrats for support, who are the second largest party in the Senate.

Christian Democrats now pivotal

The Christian Democrats, who have nearly always been in government since the end of the Second World War and who remain powerful at the provincial level, have quietly backed the majority of the government’s program.

But they have been vocal in their opposition to signature reforms, such as the decentralization of child care as well as higher taxes. They could condition their support for legislation on tax relief — something that would require deeper spending cuts than Labor is likely to tolerate.

Christian Democrat leader Sybrand van Haersma Buma insisted on Tuesday that he would do no deals with the government “beforehand”.

Different views on tax reform

Labor Party leader Diederik Samsom singled out Buma’s party and the Greens as possible partners for tax reform, saying, “We must secure the widest possible support in parliament.”

The new Green party leader, Jesse Klaver, sounded less hopeful, telling reporters the point of tax reform should be to reduce income inequality.

Rutte’s liberals argue inequality is low enough and the tax system must be made simpler, not more redistributive.

Sleepy body

The Senate is usually a sleepy constitutional body that can only send legislation back to the lower chamber. Most senators are retired politicians who toe the party line.

Three Labor Party senators broke with tradition last year, when they unexpected blocked a major health reform bill. This led to days of crisis talks between the ruling parties.