Parliament receives too little information on tax revenues to scrutinise the government effectively. Annual tax revenues (€301.6 billion according to the 2026 Budget Memorandum) are accounted for in several annual reports and without explanatory notes. This makes it difficult for parliament to gauge the results of tax measures. There is a risk that opportunities to make the tax system more efficient, effective and simpler will not be taken. In this audit, the Netherlands Court of Audit makes concrete recommendations to improve the provision of information.
Revenue accounts spread across several reports and articles
Information on tax revenues is not recorded in just one section of the Ministry of Finance’s annual report but is spread across several annual reports and policy articles. The Central Government Annual Financial Report, however, includes an appendix presenting all tax revenues, but differences between expected and actual revenues are seldom explained if at all. As there is also no detailed multiannual summary of tax revenues, changes over time are not visible.
Multiple accounts of tax and contribution revenues
The figure above shows that tax and contribution revenue accounts are spread across several annual reports and policy articles. The Central Government Annual Financial Report for 2024 states that tax revenue amounted to €283,808 million and social insurance contribution revenue to €133,174 million (on a cash accounting basis). Social insurance contributions are not entered in central government accounts. Of total tax revenue of €283,808 million, €235,914 million is accounted for in the Ministry of Finance’s annual report, €43,836 million in the annual report of the Municipalities Fund, €3,954 million in the annual report of the Provinces Fund, and €104 million in the annual report of the BES Fund. In the Ministry of Finance’s annual report, the total of €235,914 million is spread across article 1, Taxes, article 6, VAT compensation fund, and article 9, Customs. €213,262 million is recognised under article 1, Taxes, €4,485 million under article 6, VAT compensation fund, and €18,167 million under article 9, Customs.
No information on effect of tax plans
The tax system is amended every year by means of the tax plan the government presents to parliament on Budget Day. It would be logical if parliament subsequently received periodic information in a single document on differences between expected and actual outcomes of the measures in the tax plan. It would then be clear whether the tax plan’s budgetary goals were being met. As such information is currently not made available, it is difficult for members of parliament to determine whether tax measures are having the required effect.
Explanatory notes on the source of tax revenues are limited
Parliament receives limited information on tax bases, even though the information it needs is available. Income tax revenue, for example, is raised by taxing income from employment and income from capital. Parliament receives information on only the aggregate amount. As a result, it is not clear what part of the revenue is raised on what type of income. The impact of a possible shift in the tax burden from capital to labour is thus hidden from view. The Court of Audit demonstrates in its report that more is possible.
More insight into the composition of income tax is possible
The figure above shows that income tax can be specified in greater detail. Breaking income tax down into ‘boxes’ and ‘income categories’ provides more information on the tax base. The figures above are taken from tax return data for 2022. They show that box 1 income is the highest, amounting to €463 billion, box 2 income amounts to €21 billion and box 3 amounts to €14 billion. These amounts are stated after deduction of the personal allowance. A further breakdown of the tax base by income category can be made within the boxes. The figure shows a further breakdown of the tax base by income from employment (including residential home ownership). Other income categories in box 1 include: profit from business (€39 billion), wages (€441 billion), result on other activities (€3.5 billion), periodic benefits and payments (€0.5billion), income from home ownership (-€14.6 billion), income support measures (-€2.5 billion) and the personal allowance. The figure also includes an adjustment of €1.5 billion for income taxed elsewhere and for exempt international organisations. The personal allowance can be broken down into (2022 data) expenditure for weekend visit of seriously disabled persons aged 21 or older (-€0.01 billion), study costs and other educational/training expenditure (-€0.1 billion), prior year personal allowance (-€0.2 billion), maintenance payments (-€0.5 billion), specific care costs (-€1.2 billion and gifts (-€1.5 billion). The colours in the figure (blue, light blue, dark grey, grey and light grey) are intended solely to distinguish the various income categories.
Legal risks not on the radar
Based on the Kerst judgment regarding box 3, since 2022 risks attaching to ongoing legal proceedings must be disclosed in the accounts. An exception is made, however, for taxation on the grounds of confidentiality (article 67 of the State Taxes Act), yet legal proceedings regularly lead to substantially lower revenues. Cases involving box 3 in 2021 and 2024 caused an estimated tax loss of more than €15 billion. There is no good reason not to disclose the legal risks in tax cases. The minister acknowledged this in his response to the report.
Concrete recommendations for more complete information
The Court of Audit has identified concrete opportunities to improve the information provided to parliament on tax revenues. For example:
- Disclose all tax revenues in the Ministry of Finance’s annual report and present them such that members of parliament receive all the information in a single section and in a single table.
- Present a more detailed breakdown of tax revenues. Where possible, include explanatory notes on the tax bases and the tax burden borne by different groups of taxpayers.
- Present more information on the goals and results of tax policy and report on them every year.
In response to our publication, the Minister of Finance has announced several measures to improve the information available on tax revenues. The Court of Audit believes members of parliament should be involved in this process.