Cumulative Leakage Effects from Tax Increases in the Netherlands Cannot Be Precisely Determined

• The total cumulative leakage effects from increased excise duties and VAT in the Netherlands cannot be precisely determined.
• Fiscal policy is only one factor influencing price differences, and the scenario is hypothetical due to the EU’s free movement of goods and people.
• The expected decrease in demand for tourist accommodations after the VAT increase is estimated at 6.2%, with a leakage effect of 4.3%.
• The leakage effect is lower than the demand decrease because domestic tourists may shift spending within the Netherlands.
• The government aims to balance revenue, health, and environmental goals, considering but not prioritizing the minimization of cross-border effects.

Source: taxlive.nl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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