“Serious imbalance”: ordinary people pay more tax than the rich

Taxation in the Netherlands and across Europe suffers from a “serious imbalance” because taxes on wages and consumption (VAT) raise much more for the public coffers than taxes on wealth and corporations, poverty charity Oxfam has said.

Analysing data from the European Commission and the EU statistical office Eurostat, Oxfam said that in the Netherlands, taxes on consumption and labour account for more than 76% of total fiscal revenues (€105 billion and €176 billion respectively).

This contrasts with less than 19% from taxes on capital income (€70 billion), such as corporate tax, and self-employed social contributions.

Less than 5% of fiscal revenues (€17 billion) come from the taxation of assets, such as taxes on land and buildings or professional and business licences.

“Our analysis shows that the Netherlands faces a serious tax imbalance,” said Martin Brehm Christensen, tax and inequality expert at Oxfam Novib. “Taxes on consumption are among the highest in the EU.

“From 2000 to 2023, the top income tax rate for the richest and biggest corporations dropped, while consumption tax rates increased, placing more of the burden on everyday people and benefiting the wealthiest. This stark imbalance shows an urgent need for reform and wealth taxes must be a priority,” he said.

Across Europe, the analysis shows, consumption and labour taxes account for almost 78% of the total and bring 13 times more revenue to governments than taxes on wealth.

Oxfam also notes that in Europe tax rates for the richest and largest corporations have decreased in the last decades, while tax rates on consumption and labour increased.

“Labour and consumption taxes account for a higher proportion of income for ordinary citizens,” Oxfam said. “While wealthy individuals also pay taxes on their work income and consumption, these contribute to a smaller proportion of their overall income.

“Wealthy people also tend to spend a lower proportion of their income on consumption. This is because a higher proportion of poorer people’s income is used to buy essential goods and services such as food.”

Oxfam is supporting calls for the European Commission to establish a European tax on great wealth. The petition needs to be supported by one million people by October 9 to trigger a formal response.

Oxfam calculates that a progressive wealth tax up to 5% on the EU’s multi-millionaires and billionaires could generate €286.5 billion each year.