Dutch Government Mistakes Reagan’s Warning for Advice

If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

American president Ronald Reagan at Rancho Del Cielo in California, August 31, 1985 (Ronald Reagan Presidential Library)

Ronald Reagan once quipped about government’s view of the economy: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

For the American president, it was a cautionary tale. In the newspaper Trouw, I argue the Dutch government seems to have mistaken it for advice.

Tax it

First: taxes. The four-party government (which includes my own) is raising tax on CO₂ emissions and natural gas use. It is also lifting an exemption from coal tax for energy companies and industrial users.

Currently Dutch gas tax is regressive: households and small businesses pay the highest rate (49 eurocents per cubic meter) and factories the lowest (4 cents).

Plants that burn coal to generate electricity (the Netherlands has three) or make steel (one: Tata) don’t pay tax over the stuff even though coal is the dirtiest of fossil fuels.

So these tax changes are justified, but they are not offset by cuts in, say, corporate tax. The government is using the revenue to pay for higher interest rates on its debts.

Regulate it

Next: regulation. The Netherlands will mandate the blending of biofuels in gasoline and recycled- and biomaterials in new plastics (at least 25 percent by 2027).

New solar parks will be required to install batteries that can store power generated during the day for use in the evening.

Companies that don’t pay CO₂ tax will be required to cut their emissions in half by 2030.

Subsidize it

Higher taxes, more regulation; as Reagan predicted, they are followed by subsidies to avoid companies leaving the Netherlands.