Left-wing voting or right-wing voting: Dutch local taxes don’t change

The 16th of March it’s time for us to vote again in the Netherlands. But does our local vote influence the municipality’s tax policy? Political shifts due to municipal elections don’t have any effect on the local tax rates and their distribution, FEB-researchers Maarten Allers and Harm Rienks discovered.

Often it is assumed that left-wing parties prefer higher taxes and more (social) services for their citizens. Whereas right-wing parties are assumed to prefer lower taxes and a small government. Research by Allers and Rienks, both affiliated with the Centre for research on local government economics (COELO) of the University of Groningen, questions these assumptions. The economists studied the period between 1998 and 2021, in which 6 municipal elections took place. During this period, the composition of the municipal council and the municipal executive has changed regularly. You would expect to see these changes reflected in the local taxes, based on the assumptions about left-wing and right-wing preferences.

Tax policies remain unchanged

Yet, the local tax rates turned out to be entirely unaffected by the political composition of the municipal council and the municipal executive. The manner in which local taxes are distributed between groups is also unaffected. Whichever changes take place in the political compositions of local governing bodies – growth of the People’s Party for Freedom and Democracy (VVD), growth of the Socialist Party (SP), growth of the right-wing parties as a whole or growth of the left-wing parties as a whole – the tax policies are not adjusted accordingly.

The researchers are surprised by these outcomes. “This raises questions about our local democracy. Public spending, its size and distribution, is one of the most fundamental political topics. If our vote doesn’t effect this, are voters then able to influence other policy areas? Municipalities are confronted with big policy challenges, like the energy transition and housing. Facing these challenges demands a lot from our local democracy”, Rienks states.

About COELO

COELO conducts research on economic and financial aspects of local government. Local governments are municipalities, regional water authorities and provinces. The research centre carries out applied policy research as well as scientific studies. COELO does research on their own initiative but also carries out projects that are commissioned by third parties. Most of their publications are in Dutch, but they also have a list of international publications.

For more information, please contact Maarten Allers or Harm Rienks.