Skip to ContentSkip to Navigation
About usFEBNews / FEB

Economic growth can be stimulated by imposing higher taxes on capital, especially in wealthy countries

17 June 2019
Fabian ten Kate

Taxes influence the behaviour of individuals and therefore also influence the economy as a whole. Economists and policymakers often assume that these effects are the same everywhere. If a certain tax influences the economy of one country positively, it is expected that this tax will have the same effect in another country.

In his PhD thesis, Fabian ten Kate concludes that this assumption is incorrect. The effects of fiscal policy strongly depend on local factors. Taxes on capital can for example influence economic growth positively in wealthy countries, but have a negative effect in developing countries.

Ongoing discussions

Ten Kate’s conclusions are relevant to the ongoing discussions about the Dutch tax system. ‘They touch on various current themes’, comments Ten Kate. ‘In the Netherlands, corporation tax frequently made the news over the past few months. I believe that taxes on capital, including taxes on operating profit, savings and dividend, can have a positive effect on economic growth in a high-income country such as the Netherlands. This contrasts with lower-income countries in the Global South, where these taxes can actually have a negative effect’.


‘Due to the large economic and cultural differences between and within countries, it is unlikely that tax measures have the same effect everywhere’, says Ten Kate. ‘Tax policies cannot simply be copied from one country to another. General recommendations on taxes can be misleading, especially when the possible different effects are not acknowledged.’

More information

Last modified:17 June 2019 11.38 a.m.
printView this page in: Nederlands

More news

  • 11 July 2019

    SMEs in the Northern Netherlands embrace innovation

    Enterprises in the Northern Netherlands innovated plentifully in 2018 This has been revealed by the Northern Netherlands Innovation Monitor, an initiative of the Centre of Expertise Vinci of the University of Groningen (UG) in collaboration with the...

  • 11 July 2019

    Sjoerd Beugelsdijk editor of striking report ‘Denkend aan Nederland’

    At the end of June, the report ‘Denkend aan Nederland’ [Thinking of the Netherlands] conducted by the Social and Cultural Planning Office (SCP) garnered national attention on radio and television. Despite stark contradictions in public debate, the...

  • 11 July 2019

    Major companies’ annual reports too vague about climate impact

    Many major Dutch companies publish extensive information about climate impact in their annual reports. However, very few companies provide concrete, detailed information about their own CO2 emissions, the impact of climate change on their business...