Politics and Elections in the Netherlands: Rutte III era

[parochial boy]

So these are dividends that are paid by the companies directly? or by the investors receiving the dividend? As in, I would imagine most of Unilever's shareholders live outside the Netherlands - so how would this impact the taxes paid by, say, a shareholder in Canada?

In any case, it would probably be a fantastic boom for the kitchen industry of paying-yourself-through-your-own-personal-company, so pretty good for the tax "planning" crowd anyway

[DavidB.]

This is mvd10's area of interest, so he should feel free to correct me if I'm wrong, but I understood it as follows: shareholders who receive dividend from a company based in the Netherlands officially pay 15% over this dividend, regardless of whether these shareholders are based here. Those shareholders who live in the Netherlands, however, already paid 0% in practice, as they were allowed to make some calculation with the income tax (the same goes for shareholders from a number of countries with which the Netherlands has tax treaties). Shareholders who live outside the Netherlands and outside a country with which the Netherlands has such an agreement did have to pay 15%, which will not be the case anymore from next year onwards if the government actually abolishes the dividend tax.

[windjammer]

Much ado about asylum policy as of late, since two Armenian children aged 13 and 12 who had been here for ten years were set to be deported to Yerevan. Their mother had already been deported. Their asylum bid had been rejected countless times, since Armenia is a safe country, but Dutch asylum legislation allows applicants to appeal countless times, with the consequence that children are sometimes deported after having lived in the Netherlands for most of their lives. There were many protests for the two children, but first it appeared as if this would not change anything. When the mother (who has pulled many tricks in the background) then made her children disappear on the night before their deportation (they went "into hiding") and the police asked for citizens to help find them (bad idea), Deputy Minister of Immigration Mark Harbers (VVD) decided to use his discretionary powers and make an exception for the two children. This also means their mother will be allowed to return, even though her asylum application was rejected something like eight times. Presumably CU and D66 exerted a lot of pressure on the VVD in order to have Harbers use his discretionary powers, as many members of these two pro-immigration parties cancelled their memberships over this incident. It painfully points at the fact that D66 and CU lost the immigration issue at the negotiating table.

The government parties don't trust each other at all, as D66, CDA and CU keep struggling with the expected abolishment of the dividend tax: for the former two parties, as many as 40% of their voters in 2017 say they doubt they can vote for them again if the dividend tax is actually abolished. As energy prices, healthcare expenses and the VAT will increase sharply next year, the scrapping of the dividend tax for Unilever and Shell seems an even more obscene measure - the optics are really bad.

Embarrassingly, because of this intra-government disagreement, the government agreed on the 2019 budget too late and missed the deadline to have everything calcultated by the Council of State. The Deputy Head of the Council, former minister Piet-Hein Donner (CDA), took the highly unusual step to summon the Deputy Minister of Finance Menno Snel (D66) to his office and have him explain why this happened. In order to maintain its independence and avoid being viewed as partisan, the Council of State can only be in contact with government officials through a special procedure ("Article 24"). This procedure is usually only invoked for about 1% of the budgetary clauses, but was invoked for much more of the budget this time.

I would not be surprised if the government collapsed over the dividend tax, either this year or next year.

Another scandal that has hurt D66 is the fact that Alexander Pechtold's former mistress, who just resigned as a D66 local councillor in Kampen, told the press that Pechtold had essentially forced her to undergo an abortion, treated her badly altogether and blackmailed her over things, threatening to destroy her reputation and her political career. Pechtold has had his fair number of scandals (the "penthouse" he received from a Canadian diplomat keeps sticking too) and D66 fear that this most recent scandal is going to hurt them in the Provincial elections in March. There is speculation about Pechtold resigning at the October party congress. The question is: who would replace him? Minister of the Interior Kajsa Ollongren was always seen as the most likely successor, but her reputation is very tainted after abolishing the referendum, which many D66 members do not like.

Then finally a poll not by Peil: EenVandaag have ditched their cooperation with GfK/De Stemming, which was the worst poll in the 2017 general election, and now have their polls conducted by Ipsos, the best pollster in 2017.

Ipsos/EenVandaag (September 4, numbers compared to GE):
VVD 32 (-1)
PVV 18 (-2)
CDA 17 (-2)
GroenLinks 16 (+2)
SP 14 (nc)
D66 13 (-6)
Forum voor Democratie 9 (+7)
PvdA 8 (-1)
PvdD 7 (+2)
ChristenUnie 6 (+1)
50Plus 5 (+1)
SGP 3 (nc)
DENK 2 (-1)

A very different picture than with Peil, which has CDA and VVD much lower and FVD (and DENK) much higher. Peil wasn't all that inaccurate in 2017 either, so I guess the truth is somewhere in between.

Who could have expected D66 to get destroyed by joining a center-right to rightwing government? Truly it must be junk!

[Zinneke]

The real comparison to make is the hypothetical score they would be on now had they joined Klaver's initial proposal during the first debate.

[EPG]

Since when is 13 D66 seats "destroyed"?

[DavidB.]

Peil.nl today (compared to last week):

VVD 26 (-1)
GroenLinks 18 (+1)
Forum voor Democratie 16 (nc)
PVV 15 (-1)
SP 13 (+1)
PvdA 12 (nc)
CDA 11 (nc)
D66 10 (-1)
PvdD 8 (nc)
DENK 7 (+1)
ChristenUnie 6 (nc)
50Plus 5 (nc)
SGP 3 (nc)

Ipsos looks more believable to me...

Only 34% want the government to finish its term compared to 50% when they assumed office. 78% of VVD voters want the government to stay in power until 2021, but among all other government parties a majority of 2017 GE voters think the government should collapse beforehand: only 47% of CDA voters, 45% of D66 voters and 38% of CU voters want the government to complete its term.

47% think Deputy Minister of Immigration Harbers (VVD) made the right decision to allow the two Armenian children to stay, 46% think he made the wrong decision. Big majorities of VVD (26/66), CDA (38/55), FVD (18/73) and PVV (18/77) think Harbers made the wrong decision, but majorities of voters of other parties agree with his decision.

39% want to soften immigration legislation so that more children of asylum seekers will be allowed to stay in the Netherlands, 53% do not support such changes. Clear differences within the government here: 67% of D66 voters want to soften immigration legislation, but only 19% of VVD voters and 23% of CDA voters would support this.

[mvd10]

I'm too lazy to explain the full workings of the dividend tax and I actually don't know that much about international tax rules (anything >>>>>> tax accounting even though I had a 9 for accounting, sorry ), but basically because of tax deals only shareholders in countries who don't have a tax deal with us would profit.

If I'm an German investor (30% dividend tax rate iirc) and I invest in shares of a Dutch company the company would withold the 15% Dutch dividend tax and I'd also pay the German 30% dividend tax rate. But I'd be able to get a rebate on any dividend taxes in excess of the 30% from the German tax authorities, so I'd only pay 30% (15% to the Dutch government, 15% to the German government). If the Netherlands abolishes the dividend tax I'd pay the 30% German tax rate but I wouldn't get a rebate so basically the tax cut goes to the German government. But in countries without a dividend tax there usually is no rebate, so it would benefit British investors (or investors from the Cayman Islands...). I believe they estimated that about 25% of the money would go to actual foreign investors, 75% would go to foreign governments (which doesn't help us at all obviously).

The reason Shell and Unilever want this is because they have very close connections to both the UK and the Netherlands, so they have a sizable contingent of British shareholders and it's rather attractive for them to move to the UK because of the dividend tax rules. You also have a lot of large funds which aren't actually British but have British subsidiaries because of tax rules (UBS asset management, BlackRock, etc). I guess having more acess to their funds would be nice, but I doubt this justifies a 2 billion tax cut and I really doubt whether Rutte should choose to die on this hill. Just cut the corporate tax or so.

Anyway, I'm also not sure whether D66 would have been much better off in a centre-left government without the VVD (what would it even look like? CDA-D66-GL-SP-PvdA-CU lmao?). They probably would be slightly better off electorally, but let's not forget that in most hypothetical horserace Rutte vs Klaver/Asscher/Samsom polls like 40-50% of D66 voters would vote for Rutte so there is a sizable percentage of D66 voters that probably would feel awkward in a left-wing government. VVD-CDA-D66-GL definitely would have been best for D66 electorally.

Pechtold also has a bit of a scandal. He had a short-lived relationship with a former D66 municipal council member and now the woman claims she was pregnant and Pechtold threatened to defame her if she didn't get an abortion. It's probably a bullsh**t story, but it's rather bad for Pechtold I suppose. Rumour has it that he might even resign in October, but I'm not sure about that.

I think the asylum thing might have negative effects on the VVD on the long term. One might think that the current 18-20% of the voters that claims to support the VVD despite the little scandals, Rutte fatigue and the dividend tax is the hardcore VVD base but that's not necessarily true. At several points during Rutte 2 the VVD was polling at 13-15%. The VVD base might not rebel over scandals or the dividend tax, but they do rebel when either their own financial interests are under attack (means-tested healthcare premiums) or when the VVD is seen as too soft on crime/immigration. If more of these cases pop up I wouldn't be surprised if the VVD drops to late 2015 levels.

[parochial boy]

Interesting, thanks MVD (and I find tax accounting fairly interesting unfortunately, you should try "audit and assurance" if you want dry )

Figures the UK would be the source of tax shenanigans, but you would have thought the whole Brexit thingy would have made any threats on the part of Unilever/Shell a little bit emptier

[DavidB.]

... and suddenly we get a lot of polls: here is I&O, one of the worst pollsters in 2017.

September 15 (compared to GE17)

VVD 26 (-7)
GroenLinks 19 (+5)
PVV 15 (-5)
CDA 15 (-4)
SP 14 (nc)
D66 13 (-6)
Forum voor Democratie 12 (+10)
PvdA 11 (+2)
ChristenUnie 7 (+2)
PvdD 6 (+1)
50Plus 5 (+1)
SGP 4 (+1)
DENK 3 (nc)

Poll looks quite believable, somewhere between Ipsos (which overpolls the "bourgeois right", underpolls left + "populists") and Peil (overpolls FVD and some small parties, underpolls "bourgeois right"); though I&O tend to overpoll the combined left. Anyway, what a mess this is.

40% would approve of Rutte-III, 56% disapprove. 64% oppose the abolishment of the dividend tax. Carola Schouten (CU, Deputy Prime Minister, Minister of Agriculture) is the most popular minister. Klaas Dijkhoff (VVD) and Gert-Jan Segers (CU) are the most popular parliamentary group leaders. The four least popular ministers are all in the VVD. In descending order of popularity: Mark Rutte (PM), Eric Wiebes (Economic Affairs), Sander Dekker (Legal Protection) and Stef Blok (Foreign Affairs).

[mileslunn]

Looks like unless I am reading it wrong (I don't speak Dutch), the changes in income tax will be phased in towards 2021 not all this year.  Otherwise I believe the top tax rate only falls from 51.95% to 51.75% and then to 50.5% in 2020 and finally to 49.5% in 2021.  Is this correct.  The dividend tax seems like it would benefit the wealthy so while economically a decent idea, we live in a populist age so I am not surprised greater backlash than say there would have been a decade ago.  Corporate tax cuts also look to be scaled back a bit although to be fair when compared to G7 countries, only UK is lower than the Netherlands.  Even with Trump's tax cuts, US rate if you include state rates is higher in the majority of states with only a handful being lower.  On the top marginal rate, all states are lower even California which is the highest, never mind top rates in the US kick in at around $470,000 as opposed to 68,000 Euros so affect far fewer than in the Netherlands.

[Grand Wizard Lizard of the Klan]

So, how was that police protest last weekend? How it influenced everyday life?

[Diouf]

Seems like VVD, or at least Klaas Dijkhoff, is quite inspired by the newest set of Danish immigration laws.

As I can tell his proposals include both harder punishments for crimes committed in some areas, mandatory pre-school for children in ghetto areas and lessons in Dutch democracy and traditions.

Unfortunately, the coalition partners are against.

https://www.ad.nl/politiek/vvd-criminaliteit-in-probleemwijken-dubbel-zo-hard-bestraffen~a8839594

[DavidB.]

The third Tuesday of September is always the day on which the budget is presented. The King makes a tour through the center of The Hague and makes a speech; in the days afterwards, the budget is discussed in parliament in the annual General Political Reflections, which is the high point of the parliamentary year.

The generally unpopular government has a fragile position, but the opposition is divided, with the untouchable PVV as the only opposition party with more than 10% of the seats. The approach most opposition parties took was therefore to inflict as much damage on Rutte and the government as possible. The weak spot of the government is the proposed abolishment of the dividend tax, which was alluded to countless times in opposition politicians' speeches. At the same time, the government parties need to be more clear about their profile, which is presumably part of the reason why VVD parliamentary group leader Klaas Dijkhoff introduced the idea of importing Denmark's integration laws to the Netherlands. Jesse Klaver (GL) also interpreted this as a trick to avoid talking about the scrapping of the dividend tax, which might also be true. The level of parliamentary debate reached a new low, with predictable Wilders/Kuzu and Wilders/Pechtold clashes receiving much attention, but in terms of content not many new things were discussed. To me, a high point of the debate was the poem with which Thierry Baudet started his speech, but given that he was the 13th speaker, most MPs had presumably tuned out on the debate already. On the left it was notable that GL, SP and PvdA once again managed to overcome their differences and present a common budget as a "counterproposal" to the government's budget.

The debates will continue tomorrow, when PM Rutte has returned from Brussels, and will presumably continue to receive loads of criticism for the dividend tax proposal - especially now that the Council of State has issued a highly negative advise on this proposal, claiming not enough attention was drawn to the many critiques of economists who found that the measure will not have any positive effect on the Dutch economy. To be continued.

[DavidB.]

Peil.nl poll following the General Political Reflections:

VVD 26 (nc)
GroenLinks 18 (nc)
PVV 17 (+2)
Forum voor Democratie 14 (-2)
PvdA 13 (+1)
SP 12 (-1)
CDA 11 (nc)
D66 10 (nc)
PvdD 8 (nc)
DENK 7 (nc)
ChristenUnie 6 (nc)
50Plus 5 (nc)
SGP 3 (nc)

PVV win 2 seats directly from FVD. In all his vulgarity, Wilders was at his best, while Baudet's performance was generally seen as unconvincing. He particularly received much criticism for the part where he said participating in these debates is "below his dignity", as he thinks parliamentary debates are not meaningful because everything has been set in stone in the coalition agreement, nobody is open to being convinced with arguments, and the debates only serve to achieve popularity through one-liners at the 8 o'clock news. He has expressed similar sentiments before and I get where he comes from, but the public don't seem to like it.

Peil.nl found that Wilders (19%) and Asscher (19%) were seen as the best opposition leaders in the debates, followed by Klaver (16%) and Baudet (8%). 29% said "nobody in particular" stood out. For the coalition parties, 25% said VVD leader Dijkhoff was the best parliamentary group leader (44%: "nobody in particular").

81% support Dijkhoff's proposal to force children aged 2 to 2.5 into special language schools if they don't speak Dutch; 65% think children in problematic neighborhoods should receive special education on Dutch democratic values and traditions; yet only 21% support punishing crimes perpetrated in problematic neighborhoods with a sentence twice as high as in other neighborhoods.

39% support Wilders' measures to ban all public displays of Islam, 50% oppose it. Still a high number in support, considering that the question even included a ban on the Qur'an, something I would assume is supported by fewer people. But perhaps many people were still inclined to say yes to the entire package.

The alternative budget presented by the left (GL, SP, PvdA) is generally viewed positively: 57% say their proposal is better than the government's proposal, 75% like the general idea of opposition parties introducing an alternative budget, and only 35% think this budget would stymie economic growth. However, 54% think these parties would not have introduced this budget if they were actually in the government, and - painfully yet inevitably - 62% agree with the statement "when I see this alternative budget, I wonder why the PvdA continued governing with the VVD." 89% of SP voters, 86% of PvdD voters, 72% of GL voters and even 45% of PvdA-2017 voters agree with this statement.

[DavidB.]

The government intends to introduce a proposal that requires people who want a firearm permit to disclose information on their race/ethnicity, religious beliefs, and political views, Minister of Justice and Security Ferdinand Grapperhaus (CDA) declared. The initiative was immediately criticized heavily by the Council of State, privacy-oriented NGOs, and MPs of coalition parties CDA and D66.

Collecting this type of information remains a highly sensitive subject in the Netherlands, where the highest percentage of Jews in all of Western Europe was deported in the Holocaust, largely due to the excellent administration with detailed information on citizens' background. I think it would be the first time after WW2 that the government would collect this sort of information (attempts at organizing a census failed) and it seems obvious that this is not actually going to happen.

[DC Al Fine]

The government intends to introduce a proposal that requires people who want a firearm permit to disclose information on their race/ethnicity, religious beliefs, and political views, Minister of Justice and Security Ferdinand Grapperhaus (CDA) declared. The initiative was immediately criticized heavily by the Council of State, privacy-oriented NGOs, and MPs of coalition parties CDA and D66.

Collecting this type of information remains a highly sensitive subject in the Netherlands, where the highest percentage of Jews in all of Western Europe was deported in the Holocaust, largely due to the excellent administration with detailed information on citizens' background. I think it would be the first time after WW2 that the government would collect this sort of information (attempts at organizing a census failed) and it seems obvious that this is not actually going to happen.

Still, its creepy af that people are even considering this.

'Murica's approach to government does have some virtues.

[mvd10]

A few days ago 7 people in Arnhem and Weert have been arrested, they are suspected of planning to commit a terrorist attack during a major event (unknown which event). Police found AK-47s and other weapons in their houses. 1 of the suspected terrorists already was sentenced for trying to travel to IS territory, but apparently he was released on probation. The police has been monitoring these people since April because of an AIVD tip. Arnhem (city in Gelderland with 150,000 inhabitants) has an unusually large amount of radicalized Muslims, I believe there is no place outside the Randstad where more people travelled to IS territory than Arnhem.

Some trouble in the coalition. Last year the coalition enthusiastically announced they wanted to be the greenest cabinet ever, but it looks like VVD and CDA didn't really realize how much money the energy transition was going to cost taxpayers. VVD and CDA on the one side and D66 and CU on the other side haven't reached an agreement on how to reduce carbon emissions yet.

[mvd10]

Another hit for Rutte: Unilever very likely will not relocate to the Netherlands. British shareholders blocked the move because relocating to the Netherlands would mean Unilever wouldn't be in the FTSE anymore. Shareholders fear that this would mean that British shareholders would sell their Unilever stocks (people love tracking index funds) which would cause Unilever to drop. The government already is reconsidering repealing the dividend tax because of this. I guess this was the reason they needed to finally drop it lol.

The whole HQ debate was stupid in my opinion anyway. This never was about the HQ, nobody should have cared about the symbolical Unilever HQ and the 30 jobs that came with it. The only possible justification of this tax cut could be the effect it has on the cost of capital. Even though most economists seemed to oppose it, there were 2 economists who openly supported it. They built a model based on the theory that the marginal investor (the last investor to buy a certain stock, the ones with the lowest returns) eventually decides the stock price. Since the dividend tax heavily/only falls on those ''marginal investors'' (basically the unfortunate few who do have to pay the dividend tax) it's rather inefficient and raises the cost of capital, unlike general income or corporate taxes which fall on everyone and therefore are less distortionary. But their model is rather abstract and I don't know whether it's enough to justify the tax cut, there also seems to be a lot of empirical evidence against repealing the dividend tax (ugh, I should stop since at this rate I'll be rambling about the Lucas Critique and deep parameters soon lmao). In the end dropping the tax repeal probably was the best thing. Politically it definitely was the best thing lol.

A weird thing happened. The MIVD (military intelligence service) caught 4 Russian spies who tried to spy on the Organisation for the Prohibition of Chemical Weapons in The Hague. The Russian spies made a lot of blunders. They arrived on false passports with almost identical serial numbers, they always were together, they had taxi vouchers with the address of the Russian secret service, etc.

[DavidB.]

The Unilever decision is extremely embarrassing to the government and may provide D66 and CU with the argument necessary to cancel the move altogether. Since D66 and CU received some climate stuff to accept the abolishment of the dividend tax, we can only hope this part will now be cancelled too, which would be fair for VVD and CDA

Today the D66 party conference takes place and there is a lot of turmoil within the party, with suggestions that Alexander Pechtold would resign.

[DavidB.]

Aaaand he's gone. This doesn't bode well for the coalition either.

[Diouf]

Aaaand he's gone. This doesn't bode well for the coalition either.

Who are most likely successors? I guess some of the ministers? Ollongren, Kaag, van Veldhoven? They also have some fairly notable MEPs (in ‘t Veld and Schaake), where I believe the former just won a tough battle for being first on the EU list. Was Pechtold on the right wing economically or focused more on that aspect than others?

[DavidB.]

Aaaand he's gone. This doesn't bode well for the coalition either.

Who are most likely successors? I guess some of the ministers? Ollongren, Kaag, van Veldhoven? They also have some fairly notable MEPs (in ‘t Veld and Schaake), where I believe the former just won a tough battle for being first on the EU list. Was Pechtold on the right wing economically or focused more on that aspect than others?

Names often mentioned are MPs Jan Paternotte and Rob Jetten (but the latter is probably too young and inexperienced) and ministers Sigrid Kaag and Kajsa Ollongren. MEP Sophie In 't Veld could probably have had a decent shot but was just re-elected as number one candidate on the EU list.

Sigrid Kaag is the one to watch: she is not a party machine politician, but very popular within the party and viewed as "stateswomanlike". The media love her and she just made a widely lauded speech in which she called on citizens to remain vigilant when it comes to "populism." The only question is whether she wants it. Ollongren has made herself very unpopular both within and outside her party by being responsible for abolishing the referendum. Her record in Amsterdam wasn't too stellar either, and she is uncharismatic. She was viewed as the "crown princess" of the party in early 2017 but I don't think this is going to happen anymore. I would place my bets on Kaag or Paternotte.

Pechtold was probably more economically right-wing than a lot of D66 voters, but I would not say any of the abovementioned candidates would have markedly different policy preferences than he had, though obviously someone like Sigrid Kaag has a very different, international profile. Though Paternotte would perhaps be more inclined to care about direct democracy and 'democratic renewal', and may also be more of a 'realo' on integration and multiculturalism.

[mvd10]

I (as always) agree with David's analysis. I don't know whether Kaag is really suitable to be a party leader, she's new in politics and she might prefer being minister over getting really political (though her speech seems to suggest something else). If Kaag wants it it probably is hers though, I imagine they definitely want a woman if possible lol (and the circlejerk over Kaag's speech was astounding). Ollongren is hated by too many people, Jetten and Paternotte are too inexperienced. If Kaag (or another minister) becomes party leader they'll also need a new fraction leader. Maybe that's something for Jetten. Jetten definitely was seen as the crown prince, even more so than Paternotte imo. Maybe Pia Dijkstra for fraction leader? But she's probably too old and I don't think she's interested. She could be a placeholder for Jetten or Paternotte I suppose.

[DavidB.]

Fully agreed with your comments on Kaag. I initially thought she didn't have any leadership ambitions but it is actually logical for her to have them and the speech, in which she broke the unofficial code for ministers (that are not party leaders) not to talk about subjects they are not responsible for, made me think she wants it, though I still would not be surprised if she does not do it.

But I don't think Paternotte is too inexperienced. He became a member of the Amsterdam council in 2006 already, led D66 Amsterdam to their big election victory in 2014, was successful in striking a coalition agreement, and subsequently led the D66 group. He has been in parliament for 1.5 years now, which should be enough to learn the rules of The Hague. Admittedly he is my preferred candidate. Jetten led D66 Nijmegen from 2010 until the 2017 election, but Nijmegen is of course not the same as Amsterdam.

[mvd10]

It's starting to look very possible that D66 will just appoint a placeholder. Kaag and Ollongren are in cabinet so they can't be fraction leader and D66 might not want to appoint possible future leaders Jetten or Paternotte during a period of turmoil. My best guess is that a relatively experienced MP (Paul van Meenen?) becomes fraction leader as placeholder, either Sigrid Kaag or Kajsa Ollongren will become their lead candidate for the next general elections and after the inevitable loss Rob Jetten or Jan Paternotte (or foreign affairs spokesperson Sjoerd Sjoerdsma?) takes over. Since there are so many candidates you also have the danger of internal turmoil and leadership battles, which can harm both D66 and the coalition (if candidates try to pander to D66 voters who don't like this coalition).