The Netherlands economy progressing while U.S. economy is regressing

The Netherlands has a prosperous and open economy in which the government has reduced its role since the 1980s. Industrial activity is predominantly in food-processing (Unilever and Heineken International), chemicals (DSM), petroleum refining (Royal Dutch Shell), and electrical machinery (Philips). In the north of the Netherlands, near Slochteren, one of the largest natural gas fields in the world is situated. So far exploitation of this field has resulted in a total revenue of €159 billion since the mid 1970s. N.V. Nederlandse Gasunie still is the largest public-private partnership P3 world-wide following the global energy-transition of 1963 from coal to gas, coupling oil and gas prices. With just over half of the reserves used up and an expected continued rise in oil prices, the revenues over the next few decades are expected to be at least that much.

The Netherlands has the 16th largest economy in the world, and ranks 10th in GDP (nominal) per capita. Between 1998 and 2000 annual economic growth (GDP) averaged nearly 4%, well above the European average. Growth slowed considerably in 2001-05 due to the global economic slowdown, but accelerated to 4.1% in the third quarter of 2007. Inflation is 1.3% and is expected to stay low at around 1.5% in the coming years. Unemployment is at 4.0% of the labor force. By Eurostat standards however, unemployment in the Netherlands is at only 2.9% - the lowest rate of all European Union member states. Despite ranking only 10th in GDP per capita, UNICEF ranked the Netherlands 1st in child well-being.

The Dutch government has a solid record of stable industrial, educational and tax policies that stimulates entrepreneurship and foreign investment in the Netherlands. Corporation tax rates have been cut by the Dutch government from 34.5% in 2006 down to 31.5%, with a further cut to 30% taking place this year. This reduction will bring the country’s corporate tax rate below the average rate in the old EU15, which currently stands at 31.4%.

In 2005, the government put forward further reductions in corporation tax to stimulate the economy and foreign investments: as from 1st January, 2007, the starting rate of corporation tax will be lowered to 20% on the first €41,000 of profit, compared with the current 27%, and the headline rate of corporation tax will be reduced from 31.5% to 26.9%. Owners of small and medium-sized enterprises will benefit from an exemption of at least 5% of their profits.

The proposals also include a proposal to reduce the tax rate for profits derived from intercompany financing and treasury activities to 10%, and confirm the already announced abolition of the capital duty of 0.55% on the issue of share capital.

The United States actually has a bill in Senate for a simpler tax system. It is called the FairTax Act. Do you know what the FairTax is?

* Ensures Social Security and Medicare funding
* Enables workers to keep their entire paychecks
* Enables retirees to keep their entire pensions
* Refunds in advance the tax on purchases of basic necessities
* Allows American products to compete fairly
* Brings transparency and accountability to tax policy
* Closes all loopholes and brings fairness to taxation
* Abolishes the IRS

For more information visit www.fairtax.org.

For more info on the Netherlands economy. Click here.

For more info on Dutch taxes. Click here.

Bookmark and Share