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General tax reform 2001

Country of implementation
The Netherlands
General short description of the innovation
A complete reform of the tax-system with several objectives. Increasing employment, improving the economic structure, lowering labour costs and stimulating economic independency were important goals in relation to resilience.
Target group
Total Population
Policy Field
  • general fiscal
Type of Policy
  • public
Duration of the policy
since 2001
Scope of innovation
  • Scope: structural
  • Budgets: a decrease in total tax burden of 3.1 billion euros was aimed for
  • Spatial coverage: national
General description of (intended) objectives and strategies
The reform was meant to modernize and simplify the tax system in response to changing economic, social and financial developments. There were many reforms with regards to both income tax as well as taxes on financial assets and properties, by introduction of a so-called ?boxes-system?. The costs of labour were to be reduced for both employers as well as employees. The maximum rate was reduced from 60% to 52%. An additional low rate was introduced for low incomes. Also, a general deduction for working costs was introduced. This would also result in a bigger difference between net income and net social security benefits, thereby giving incentives for work. Specific measures were meant to stimulate women to keep working, because their often lower income became entitled to specific reduction of taxable income (before their tax-credits were ?used? by the male breadwinner, which meant a disincentive for women to start working because they would lose this credit).
Nature of the innovation-long-term perspective
fundamental change of the tax-system
Type of innovation
  • new/changed output and/or outcome
New outputs
  • others (tax system)
Intended target group
All inhabitants paying taxes on income and assets
Actors involved in policy-making/implementation and/or evaluation
  • central state (regulation)
Intended output
  • benefit level (benefit levels have decreased relative to wages)
  • subsidies/tax-credits (various tax-credits have changed, especially with regards to work)
  • wages (net wages have increased because of lower tax burden)
Clarification of outcomes in terms of impacting resilience and labour market inclusion
The reform has resulted in a general reduction of tax-burden of 3.15 billion euros. The cost of labour has decreased. Net wages have risen, but also because of favourable economic development in the beginning of the millennium. The tax-burden for employers has been reduced and become more in line with other European countries. The replacement rate for benefits to wage has been lowered, giving a financial incentive to start working when on benefits. However, an overall positive impact on labour market and economic performance cannot be measured. This is explained by labour market shortages in this period that led to higher wages and costs. Also, the evaluation period was probably too short to be able to measure this effect.
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