Executive Summary
The right to approve the budget is a fundamental right of parliament. It extends not only to expenditures but also to revenues. Taxes account for most of central government’s revenue. According to the 2026 Budget Memorandum, tax revenue will total €301.6 billion in 2026, with a further €149.8 billion in social insurance contributions. Parliament authorises the budget in advance and is entitled to information after the budget has been executed in order to hold the government to account. It is therefore vital that annual reports include reliable accounts of tax revenues. The Minister of Finance is responsible for this.
In this report we conclude that the accounting information provided to parliament is inadequate for it to scrutinise tax revenues. It is therefore difficult to amend tax measures or learn lessons for the future. As a result, there is a risk that opportunities to make the tax system more efficient, effective and simpler will not be taken.
Accounts neither transparent nor simple
Tax revenue is not transparent because it is accounted for in several annual reports and budget articles. Unlike expenditure accounts, moreover, tax revenue accounts are not prepared in accordance with the Central Government Budget Regulations. Relevant policy information that is available on expenditure is not available on revenue. We conclude, for example, that annual reports provide no information on tax bases even though the information is available. Detailed multiannual information could be prepared on, for instance, the tax bases for income tax boxes 1, 2 and 3 and a detailed breakdown of taxable corporate profits could be provided.
Furthermore, it is both desirable and possible that annual reports disclose risks attaching to legal proceedings. They have had to be reported in the annual reports since 2022, but the Central Government Budget Regulations exempt tax proceedings on the grounds of tax confidentiality. There is no good reason for this exemption: risks can usually be disclosed and explained without revealing information that is traceable to individual persons or businesses.
The Dutch central government keeps accounts on a cash basis, recognising tax revenues in the year in which they are actually received. This accounting method differs from international standards, which require transaction-based accounting. In transaction-based accounting, tax revenues are recognised in the year in which a taxable event takes place. The Netherlands cannot suffice with only cash-based tax accounts. As a member of the Economic and Monetary Union (EMU), it must also prepare accounts on an EMU basis. If it prepared transaction-based accounts it would not need to calculate separate EMU amounts, and with the correct application of the international standards, transaction-based information would satisfy EMU requirements. Transaction-based accounts would be simpler and provide more insight into whether or not tax policy goals were being met.
More insight required into tax policy goals and results
Good scrutiny of tax revenues requires reliable accounts of the goals achieved during the tax year.
To account for both existing and new tax measures and policies, there must first be goals. The budget sets only a revenue goal for each budget article. It does not set other possible goals, such as the preferred allocation across tax bases and target groups. As a result, the Minister of Finance renders no account for, for instance, the distributive use of different types of tax to spread the burden across specific groups of citizens and businesses.
Furthermore, there are no annual accounts on the actual effect of tax measures and thus no insight into the budgetary consequences of tax changes and no foundations to explain differences between projections and outcomes.
We also found positive developments in how tax revenues are accounted for. The Strategic Evaluation Agenda for taxation, for instance, provides more insight into the results of tax policy. A wider range of topics is also being evaluated and there has been a significant increase in the depth of information provided on tax schemes. Tax schemes, such as allowances, exemptions and reduced tax rates, are a form of tax relief to pursue specific goals or promote desired behaviour. These good steps, however, cannot make up for the gaps in formal accounts of the results of tax policy.
Improved accounts of tax revenues are desirable and possible. In this report we make concrete suggestions to make the tax system simpler and more transparent. We also recommend that the accounts include more information on the goals and results of taxation. Such information would enable parliament to exercise the final part of its budget right: checking whether the results of tax policy are in line with the government’s goals or whether supplementary measures will be needed.