The age of transparency

Toespraak | 03-08-2009

Ladies and gentlemen,

The central theme of this conference, both today and during the rest of the week, is economic history.

I myself am an economist, not a historian. My job involves dealing with the current economic situation and trying to secure a bright economic outlook.

So you could say that we complement one another perfectly. You focus on the past, while I focus on the present and future.

The Dutch writer Godfried Bomans once said: ‘History is the present, seen by the future.’ From that perspective, it seems quite appropriate that I should talk about the current economic situation at a history conference.

But before I go on, let me stress what a great honour it is for me to open this conference.

The World Economic History Congress 2009 has a very extensive and impressive programme. It is a unique conference, which is only held once every three or four years. So it is an honour for the Netherlands and the University of Utrecht to host it.

Ladies and gentlemen,

This year’s conference is taking place at a time that the future will call ‘historic’. Economic history is being written before our very eyes.

We are currently in the midst of the worst economic crisis since the 1930s. This has become something of a cliché, but it is accurate nonetheless. Our economy has not shrunk so sharply in peacetime since 1931.

On the other hand, the two crises are impossible to compare. And it not easy to say which is more serious.

I would like to cite one more quotation – and I promise it will be the last. Aldous Huxley once said: ‘The charm of history and its enigmatic lesson consist in the fact that, from age to age, nothing changes and yet everything is completely different.’

How true! Both crises are serious, but their impact on people is very different. That is because circumstances have changed. Our social services and the entire structure of our society have been completely transformed.

When talking about the economic crisis, we should stress that the Netherlands had a sound economy before the crisis struck. Low unemployment, economic growth and a budget surplus.

The crisis originated almost entirely in other countries. And because the Netherlands has an open economy, it was impossible to avoid the impact of the crisis.

We had to act – and so we did. We have taken measures to alleviate the effects of the crisis in the short term, to strengthen the structure of the economy and to restore sustainable public finances.

For those of you who come from outside the Netherlands and are unfamiliar with the situation here, it may be useful to explain how I fit into all of this. In the Dutch Ministry of Finance, the Minister carries overall responsibility and concerns himself mainly with the budget and financial markets. The State Secretary is responsible for national revenue, in other words taxes, and tax policy.

So as State Secretary for Finance, my contribution to the anti-crisis package involves tax measures and measures to reduce the regulatory burden.

If you examine who is hit first and hardest by the crisis, you have to conclude that it is businesses. This is because if consumers tighten their purse strings, businesses are the first to feel it.

But I am convinced that it is also the business sector that can lift us out of the crisis. If business people do what they are good at – being innovative, creative and daring – that will help to restore confidence. That is why our anti-crisis measures focus mainly on businesses.

The measures can be divided into two main categories. Tax measures to stimulate business. And measures to make it easier to do business. Excessive regulation has long been a source of irritation to businesses. By tackling this problem we are doing the Dutch economy a great service.

Let me give you three examples of the measures we are taking.

First, companies employing research and development staff can ask for the salaries tax remitted for these staff to be reduced. This will encourage investment in research, development and innovation. And strengthen the position of the Dutch knowledge economy.

Second, businesses can submit VAT returns quarterly instead of monthly. This will boost their cash position by as much as 8 billion euros in 2009. In addition, businesses may already deduct provisional losses for 2008.

Lastly, small and medium-sized enterprises with fewer than 10 employees and a turnover of less than 1 million euros will no longer be required to draw up annual financial statements.

The business-boosting package for 2009 and 2010 is worth 1.1 billion euros. The measures are mainly intended to create liquidity for businesses, especially SMEs. It is a carefully targeted package that will stimulate investment and innovation.

Our open economy means that once the global economy picks up again, the Netherlands will quickly benefit. The anti-crisis package will give an extra boost and help restore confidence.

Ladies and gentlemen,

Confidence is a key word in economics. And not just when it comes to tackling the crisis.

Much of the Netherlands’ tax policy can be summed up in one word: transparency. And transparency leads to confidence.

Greater transparency is the central aim in various areas of tax policy. Both in the Netherlands and worldwide.

Internationally, this can be seen in the field of tax treaties, for example. The Netherlands has one of the most extensive systems of tax treaties with other countries. They make for transparency. This helps to avoid double taxation. At the same time, transparency and information sharing are vital in the fight against tax evasion, fraud and money laundering.

It is essential for countries that do not yet share information to start doing so. The OECD has been encouraging this for years. The process has now gathered pace, especially since the G20 in London. The participants agreed that bank secrecy has no future. The automatic exchange of information should ultimately become standard practice for everybody. That is what the Netherlands would like to see.

Transparency is also increasing steadily at national level, in the Dutch tax system. And that offers major benefits for both taxpayers and the tax authorities.

We are achieving this by signing voluntary agreements with companies, sectoral organisations, and local and regional authorities. This leads to a different type of oversight, known as horizontal oversight.

Transparent oversight helps to turn distrust into trust.

The aim is to create a good, open relationship between the Tax Administration and taxpayers, based on mutual trust. One in which certainty can be provided quickly, the focus is on the present, and less retrospective oversight is required.

Under the agreements, the Tax Administration is informed in advance of all expected tax risks. It then provides certainty about the tax consequences. So everyone knows where they stand. Retrospective oversight can then become less frequent and less intensive. This reduces the administrative burden. Horizontal transparency therefore saves a great deal of time and money, and reduces unnecessary risk. It promotes legal certainty and stability.

The Dutch Tax Administration is a world leader in this form of oversight.

Ladies and gentlemen,

We can see a steady shift towards more transparency in various areas of the economy. This trend is clearly visible in the area of taxation. Ultimately, transparency will become the hallmark of the modern tax system.

The more the economy globalises, the more we need transparency to enable us to exploit economic opportunities to the full. Transparency will help generate the confidence required for doing business. And the economic crisis may further accelerate the quest for transparency.

Thank you.