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    Repiglican Roast

    A spirited discussion of public policy and current issues

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    I'm furious about my squandered nation.

    Sunday, September 28, 2008

    Netherlands has taken the bold step of imposing stiff taxes on perceived fat cat benefits

    [...]

    As other European governments mull public dissatisfaction with large executive bonuses and severance packages, also known as golden parachutes, the egalitarian Dutch have been the ones to draw a line in the sand.

    "This fiscal discouragement policy ... is founded in the desire to counter excesses," Finance Minister and labour party leader Wouter Bos said in May, presenting a controversial bill to members of parliament to hit high earners with stiffer taxes.

    The measures were passed by the lower house of parliament this month, and are expected to get the final nod from the senate within weeks before coming into effect on January 1.

    "Thousands of people will pay more taxes," a finance ministry spokesman told AFP this week.

    The centre-left government will slap a new 30 percent tax on companies for "disproportionate exit bonus payments" to those earning more than 500,000 euros a year.

    It will also introduce a new 15 percent tax on companies who contribute to executives in the same salary bracket enjoying "excessive" pension payouts.

    Finally, it will raise the tax on the earnings of private equity and hedge fund managers from 1.2 percent to 25 percent, closing a loophole that minimised their contribution to the tax authorities.

    The measures are expected to add an annual 60 million euros to the public purse.

    The debate came to a head in recent months with the news of top bonuses paid to the executives who sold Dutch bank ABN Amro to a European banking group, and the 80 million euros in options, shares and bonuses paid to Numico boss Jan Bennink after selling the baby food concern to French dairy company Danone.

    Several top executives, including Michel Tilmant, of the ING banking group, have reportedly threatened to leave the Netherlands if the government pursued its plans.

    But Bos has stood firm, questioning the impact of such excesses on the economy, and the moral wisdom of having large income disparities.

    "One has appreciation that individuals with a unique talent should be paid more," he said recently. "But that understanding dissipates when the remuneration takes on an air of self-enrichment because the counter-balance is inadequate, or when it is not transparent or in line with achievement."

    His bill passed with the support of a majority of parties in parliament.

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