Tomorrow the cabinet will be working out a controversial tax rebate for businesses. The so-called Job-related Investment Discount (BIK) was one of the biggest surprises on Prinsjesdag.
The left-wing opposition was short of words to reject the new arrangement. It would be a farewell gift for the farewell employer foreman Hans de Boer. On the contrary, the cabinet calls it a crucial arrangement to maintain investment in the crisis. The big question remains: what exactly does the BIK entail?
More information about this must therefore be made tomorrow. Because apart from the fact that 2 billion euros has been earmarked, little is known about the details of the plan. “Details of the scheme are being further elaborated,” the cabinet wrote in an accompanying message to the tax plan.
There is already something to be said about the idea behind the tax credit. Due to the corona crisis, investments by the business community have declined, so the cabinet wants to boost the investment flow with the BIK again. Investments are needed to boost the economy and, the cabinet argues, create jobs.
“When companies make an investment, such as the purchase of a new machine, they receive a discount that they can deduct from the payroll tax,” writes the cabinet.
Doomsday scenario
Much of the criticism of the measure focuses on the risk of repeating mistakes previously made. Because in the 1980s, the Netherlands also had a subsidy for investments through taxes. A lot went wrong then.
In the calculations for the Budget Memorandum, the Central Planning Bureau warned not to fall into the same pitfalls as were done at the time for the Investment Account Act: “The WIR was abolished in 1988 due to excessive improper use.”
Because there were hardly any criteria, the investment scheme worked like a syrup pot for hungry flies. Investors raised money for real estate projects and even municipalities were able to find a subsidy pot for the purchase of a new fire engine through smart constructions.
The total costs: about 50 billion guilders in ten years and a headache for successive finance ministers. “It was a budgetary disaster”, former Finance Minister Onno Ruding recalls. “Everyone agreed on the abolition.”
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