Dutch Finance Minister Sigrid Kaag said a parliament proposal to introduce a tax on share buybacks would raise less money than expected.
(Bloomberg) — Dutch Finance Minister Sigrid Kaag said a parliament proposal to introduce a tax on share buybacks would raise less money than expected.
In a letter sent to parliament on Friday, Kaag said that the tax on share buybacks would only raise about €814 million ($860 million) per year rather than the €1.2 billion promised by the backers. That’s because the law may impel companies to move their headquarters abroad, she said.
Kaag also said that the law can’t take effect before 2025 because it’s not possible to introduce such a structural change as early as next year.
The Dutch parliament two weeks ago passed a proposal to raise the country’s minimum wage by upping the existing bank tax and introducing a tax on share buybacks, leading to a selloff in shares of lenders headquartered there. Lawmakers said the taxes would raise €350 million and €1.2 billion, respectively.
The proposal is still subject to Senate approval before it becomes law.
In her letter, Kaag also said that the measures could hurt the country’s competitiveness and hit the business climate. She said it may result in higher costs of lending for citizens and small businesses.
Now that the minister has considered the feasibility of the measures, parliament will follow up with another debate on the matter later this week. It is still possible that the initial proposal will be altered as a consequence of this.
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