Analysis

What’s at Stake in the Dutch Election

From climate policy to taxes, here are the key issues in the Dutch election.

The Hague Netherlands
Dutch government offices and parliament buildings in The Hague (iStock/Fotolupa)

This Dutch election campaign has been the least memorable in my lifetime. There are two more weeks to go, and two more televised debates. The first, last Sunday, failed to change the dynamic of the race.

Prime Minister Mark Rutte is almost certain to win reelection. His liberal VVD (of which I am a member) is projected to win 37 to 41 out of 150 seats, up from 33.

Support for the other parties has changed little in recent months. The ruling Christian Democrats and Christian Union are stable in the polls. The social-liberal D66, the fourth party in Rutte’s government, appears to have lost some support to the liberals on the right and Labor on the left. Labor has also won (back) supporters from the more left-wing Greens and Socialists.

On the far right, the Trumpist Forum for Democracy could take two or three seats from Geert Wilders’ Freedom Party, but its popularity has collapsed from two years ago, when it briefly rivaled Rutte’s in the polls.

Economic and social issues feel less important when Dutch voters still face daily restrictions due to coronavirus. Shopping on appointment was allowed again this week, but hotels, museums and restaurants remain closed. A 9 PM curfew is in effect. Rutte benefits from being the incumbent in a crisis. With the exception of the parties on the far right — which are unlikely to end up in government — most have, in some cases lukewarmly, supported his COVID-19 policies.

But there are other major issues that will play a role in the next four years, from climate and energy to labor law to an overhaul of child benefits.

I’ll walk you through ten of them as well as the positions of the mainstream parties on those issues, out of which the next government will probably be formed.

Business

The outgoing government promised to lower business taxes and eliminate dividend tax. The first only happened for small businesses and the second was scrapped altogether.

Eliminating dividend tax — already low by international standards at 15 percent — was meant to entice multinationals to remain in, or relocate to, the Netherlands. But when Unilever, the Anglo-Dutch conglomerate, shifted its headquarters to London, the mood in The Hague changed. Instead of eliminating dividend tax, support is growing to levy an exit tax on companies that relocate to lower-tax jurisdictions.

The Netherlands has benefited from Brexit, with some eighty British companies making the move across the North Sea, but still fewer international companies relocated to the Netherlands in 2020 than in 2019. The Netherlands Foreign Investment Agency, an arm of the Ministry of Economic Affairs, blames uncertainty around pollution rules and taxes.

All parties would raise taxes on companies, but there are huge differences. The Christian Democrats and D66 would raise corporate tax from 25 to 27 percent. Labor and the Greens would raise it to 30 percent. Labor would also increase social contributions from firms. Altogether, the party would add €42 billion in businesses taxes compared to €3.5 billion under the VVD.

Child benefits

All parties want to reform child-care benefits after it was revealed the tax authority had falsely accused more than 20,000 families of benefit fraud for often simple administrative errors, like incorrectly filling out a form or forgetting to report monthly changes in income. Many parents were financially ruined when they were forced to pay back tens of thousands of euros in child support. Rutte’s cabinet resigned over the scandal. (It governs in a caretaker capacity.)

Most parties also want to reform health-insurance and housing benefits, which are similarly tied to income and paid out by the tax agency.

Converting benefits into tax credits, as the VVD proposes, could leave low-income families worse off. Refundable tax credits, supported by D66, Christian Union, the Greens and Labor, are more likely.

Left-wing parties and D66 would also reduce the need for benefits by raising the minimum wage and making child care and health insurance cheaper or even free.

Child-care centers, among the best in Europe, caution against turning the current system on its head.

Climate

All the major parties are committed to meeting the ambition of the Paris Climate Agreement: to cut emissions in half by 2030 compared to 1990.

The Greens, D66 and Labor would reduce livestocks to meet the goal. (Farms are responsible for about a quarter of Dutch greenhouse gas emissions.) That’s a tough sell to the Christian Democrats and VVD, the two most popular parties among farmers.

To reduce the gap between what (typically low-income) owners of diesel and petrol cars and (typically higher-income) owners of subsidized electric cars pay in taxes, most parties argue for a form of road pricing.

The Netherlands has twice before tried to switch from taxing car ownership to car use. Both times it proved technically infeasible.

Education

The outgoing government has given schools and universities and additional €8.5 billion to cope with learning gaps caused by the pandemic.

All major parties except the VVD want to abolish student debt and return to a system in which students from low- and middle-income families receive a monthly stipend. The Greens would compensate students who lost out under the new rules, introduced in 2015, by giving every graduate €10,000.

Energy

There is consensus about phasing out biomass and natural gas, but nuclear and wind power are divisive.

Only right-wing parties consider nuclear a clean source of energy and are willing to pay for it.

All parties support building more wind turbines at sea, with D66 and the Greens setting the most ambitious targets. Wind turbines on land are unpopular. Only the Greens are explicitly in favor.

All parties see great promise in green hydrogen. The Greens and Labor are optimistic it will replace the jobs that are lost when gas production in Groningen is scaled back.

Liam van de Ven has more.

Health care

Nearly all parties argue for more government control in health care. Even Health Minister Hugo de Jonge, a Christian Democrat, believes competition between health providers and insurance companies, meant to encourage efficiency and cost-cutting, has gone too far.

Of the major parties, only the VVD disagrees. But even the liberals want to stop paying doctors for each procedure they perform and instead compensate them on the basis of health outcomes.

The Netherlands moved away from paying doctors and hospitals a fixed amount in order to reduce waiting lists, which it has. Before the system was reformed in 2006, Dutch patients frequently waited weeks to see a doctor and months for surgery. Paying per procedure may incentivize unnecessary care, but parties haven’t explained how returning to the old system wouldn’t bring back waiting lists.

The Christian Democrats and D66 believe they can have the best of both worlds by putting currently self-employed specialists on hospital payrolls, which would discourage individual doctors from overprescribing.

The Socialists would fold all private insurers into a national health fund. The Greens would turn private insurance companies into public health corporations. Labor wants to keep the insurance companies, but take away their power to negotiate prices with clinics and hospitals.

Insurers can now refuse to fully cover certain treatments at certain providers. The goal is to cut costs and improve health outcomes by centralizing non-urgent, specialist care.

The Greens, Labor, D66 and Christian Democrats all envisage regional health cooperatives involving health providers, insurers, municipalities and patient groups to sort out prices and allocate resources.

The Green party and Socialists want to abolish deductibles, capped at €385 per year. Labor would cut deductibles in half. The VVD would allow consumers to opt for a higher deductible in order to pay lower premiums.

The VVD is the only party that would allow hospitals to turn a profit in order to attract private investment.

Housing

The Netherlands needs to build more than 300,000 homes to meet current demand, according to Rabobank. The shortage could top 400,000 by 2025 if there isn’t a drastic increase in homebuilding.

Causes include decentralization and strict pollution rules. Permits for new developments can take years. Housing associations, which provide affordable homes to low incomes, aren’t building as much as they could. Provinces and municipalities have been slow, or even resistant, to set aside land for construction. All major parties agree the national government needs to take more proactive role.

The Christian Democrats and VVD would build outside existing urban centers. Left-wing parties are reluctant to sacrifice green space. They would rather eliminate rental tax for housing associations, so they could build more in the cities. D66 would cut the tax in half. The VVD would keep the tax but force housing associations to evict high-income renters to bring more business into the private rental market.

Labor

Most parties agree contractors enjoy too little job security compared to full-time employees. But they take opposite approaches to mending the imbalance. Left-wing parties would make it more expensive for companies to hire temp and freelance workers. The right would make it cheaper to hire workers on a full-time contract.

D66 and VVD argue self-employed status needs to remain distinct, but they agree with left-wing parties that freelancers must get unemployment insurance, something the VVD ruled out four years ago.

The Greens and Labor argue for a more generous social safety net. The Christian Democrats, D66 and VVD prefer the Danish model of “flexicurity”: higher but shorter-term unemployment benefits, lower costs for employers and more spending on reskilling.

Pensions

Most parties, as well as employers’ organizations and trade unions, agree supplemental pensions — which are separate from the Dutch version of Social Security, which provides a basic pension to all retirees — must become more personal.

Rather than contribute a share of their income to industry-specific pension funds, workers would have individual savings accounts. Defined contributions would remain, but defined benefits, indexed to inflation, would have to go.

There are many outstanding questions. Should workers be allowed to choose their pension fund? Should freelancers be obligated to save for their retirement? Should pensioners be allowed to access their entire savings whenever they want? How much cushion should be provided to those workers who are close to retirement and would lose out under the new system?

Dutch pension funds manage some €1.4 trillion in savings, about twice the Netherlands’ GDP. They invest in everything from hospitals to governments bonds.

Taxes

Almost all parties would shift taxes from income and labor to capital and profits. The Christian Democrats and VVD argue for tax relief for the middle class. Only the liberals would leave tax rates for high incomes unchanged. The Christian Democrats call for a “temporary” tax on the highest incomes.

D66 and the Greens would raise tax on savings over €1 million. Labor would raise tax on incomes over €150,000 from 52 to 60 percent. The Greens would add a tax bracket for incomes over €500,000.

Rather than reduce tax rates for low and middle incomes, the parties of the left would cut health insurance premiums and the cost of child care.

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