The impact of excise tax increases in the border areas

By Martijn van Helvert, member of the Second Chamber CDA

Martijn van Helvert,  member of the Second Chamber CDA, talks in this article about the impact of the increase of the excise tax in the border areas. According to him a serious policy is needed to keep the border livable.

Small businesses are the heart of the local economy. A fair economy and a level playing field are very important for these entrepreneurs. This is even truer for entrepreneurs in the border areas. If there is something they do not benefit from them, then it is that action from The Hague that disrupts this level playing field. And that is exactly what the government of VVD and PvdA has done over the past year with ill-duty increases. This surpassed not only the filling station, but also other entrepreneurs in the border region. It cost hundreds of jobs and small municipalities went further back in their facilities. We can call it a reconstruction.

Gap in the budget
In the budget of 2014 a gap of several hundred millions had to be filled. A quick way to get extra money is a tax increase, the prevalent thought in The Hague. In the autumn agreement of 2013 was agreed to increase the excise duty on diesel, LPG and alcohol on January 1, 2014. Just the diesel tax increase would provide additional tax revenue of 230 million.

Sales decline
In this calculate-yourself-rich-calculation of the cabinet was not taken into account the fact that the excise duty increases would lead to sales decline for the entrepreneurs in the border areas. For a country with a very long land border and one of the most open economies in the world, this is of course very strange. A child can think of that more people through tax hikes would refuel in the border in Germany or Belgium, and immediately do their groceries shopping as well there. After all, the prices are now much lower there.

CDA warns
Already on Budget Day 2013 CDA party leader Sybrand Buma warned the government for these effects. In its own budget the CDA did also proposals to avoid the tax increase. A motion of the CDA to not let the tax increase has been rejected. A motion requesting to take in the border effects in the calculations was the same fate.

Sink or swim
Already in the first weeks of 2014, the boundary effects of the tax increase turned out to be great. BOVAG released figures, which showed off huge revenue declines. This was even more reason for the CDA to establish a hotline to identify the problems for filling stations and shops. In the Reporting Border Areas over 600 messages came in, some with dealers who had lost more than half their revenue. The responses were compiled in the report ‘Sink or Swim’ on 20 February; this was presented by Sybrand Buma to state secretary Wiebes.

Bankruptcies and impair quality of life
The report shows that there was only in the first months a very strong decline in revenue at many service stations, but also in hospitality in the border region, sometimes up to 35%. The first layoffs had already fallen, and there could be more. For many entrepreneurs a bankruptcy threatened. More and more people went refueling across the border, and were doing their groceries shopping at once, and having a drink at a terrace. For business travel, the price difference is even greater than for passenger traffic.

The tax increase has put the quality of life in the border region under pressure. Stores will empty out, and provisions disappear. Voluntary organizations sense it too, for example more often that they can no longer rely on sponsorship of SMEs in the border areas because they have to deal with huge losses. Yet state secretary Wiebes refuses to review the measures.

Scuttled turnover
At the end of October, again figures on the sale of fuel were published. It showed that diesel sales in August plummeted by 15% compared to a year earlier. The average decline until August was 7%. In Belgium and Germany were increased sales in the same period by 2% and 3%. The dramatic decrease in fuel sales in the Netherlands and the increase in sales in Germany shows the direct result of the duty increases that were introduced by the PvdA and VVD last year. In gasoline we see a decline, as well as LPG. Declining sales here was a whopping 20%.

Small business owners are hit disproportionately by the extra tax increase hit. It affects not only them directly, but also those of the municipalities in the border region, where this measure causes that jobs, facilities and activities are gone and will disappear, because the measure is still working through. In addition, the measure did not realize as much as budgeted, so for the treasury, the measure was also not so good.

Randstad Cabinet
We, as CDA, have often said that this government is too much with his head in the Randstad. If they would look more often in other regions, there would indeed be seriously discussed such problems in gas extraction, or range of cell phones, or the availability of fast internet. And then they would fix our entrepreneurs within the borders, so they would not suffer under increased excise what hunts their customers across the borders. What is needed is a serious policy to keep the border livable. So that residents and businesses can thrive there and so the whole Netherlands can contribute to a strong country.