Dutch Lawmakers Back Controversial Bill, Threatening Coalition

Dutch Lawmakers Back Controversial Bill, Threatening CoalitionAI Quick Read(Bloomberg) -- Dutch Prime Minister Rob Jetten made a last-minute bid to keep his government from collapsing as lawmakers backed a controversial wealth tax amendment that could sink his coalition.

Jetten’s center-left D66 and another party in his three-way coalition made a deal with left-wing opposition groups to pass legislation to shift the country’s tax burden from income to wealth-related measures — lawmakers narrowly approved the amendment Thursday.

The People’s Party, the third group in the governing coalition, previously threatened to quit if the measure passed. It wasn’t clear after the vote what the People’s Party’s next steps would be. A spokesperson from the group didn’t immediately respond to a request for comment.

“The past few weeks have certainly had an impact on the relationships and trust within the coalition and the cabinet,” Jetten said in parliament on Thursday. “I also see that there are three coalition parties that formed a cabinet at the beginning of this year out of the conviction that we need to work together to break the deadlock on a few stalled issues.” The AEX index, a key indicator of the Dutch stock market, was little changed Thursday, closing down 0.4%.

The disagreement reflects the power wielded by several political parties in the fragmented Dutch parliament, where bartering over a wide range of issues for each particular vote has led to deadlock. Jetten’s government doesn’t have a majority in either house of parliament, and as a result has to rely on support from left- and right-wing parties to pass legislation.

If the People’s Party were to leave the coalition it would potentially bring down Jetten’s nine-month-old government. The controversial element of the amendment has been dubbed the millionaires’ tax. It proposes taxing returns on assets above €60,000 ($66,555) per year at 38.5%, among the highest rates in the euro region.

The rate below the threshold would drop to 35.5%. That rate is 36% currently, regardless of the amount. The new rules would also crack down on efforts to avoid inheritance taxes through so-called paper gifts, when money is legally given but not transferred.

According to projections from the parties supporting the amendment, the budgetary impact of the proposal would shift about €1 billion of tax burden from income to wealth. But some criticized the government crisis, downplaying the size of the changes proposed.

“Looking at the order of magnitude of the content, you would say it’s not worth breaking up a government over this,” Marieke Blom Chief Economist and Global Head of Research at ING Group. “It’s symbolic, not essential from an economic perspective.

The risk of another period of stagnation and/or regulatory uncertainty is more relevant at this time.” (Updates with result of parliament vote from the first paragraph.) More stories like this are available on bloomberg.com Catch all the Business News, Politics news,Breaking NewsEvents andLatest News Updates on Live Mint.

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