|Welcome to Econ 050: Economics and business that matters to the Netherlands and the world. In each episode, Northern Times editor Traci White interviews a new expert about everything from trade wars to the psychology in your shopping cart. This podcast is a co-production between The Northern Times and the Faculty of Economics and Business of the University of Groningen.|
Water management may not seem like an especially sexy topic, but in a country where about one-third of the ground is below sea level, it can be a matter of life or death. Water management has been a part of Dutch history since long before the Netherlands was even a single unified country, but most Dutch people don’t exactly know what the government entity that manages the water, the water boards, actually do. Even though the concept of making sure that the country doesn’t end up underwater seems pretty uncontroversial, there is a political side to water boards – should they focus exclusively on keeping water clean and keeping the land dry, or should they also be responsible for recreational use? Should the agricultural sector be charged more than private households for their water use?
Corine Houben, a researcher at COELO, the Center for Research of local governments, recently carried out research into the difference in water board taxation rates across the country, so Econ 050 wanted to find out what this vitally important but little understood branch of government really does, and why your vote matters.
On what a water board is:
Corine Houben: In the Netherlands, we have a very unique situation where we have a special authority that takes care of the water. That means they regulate the water levels, they do maintenance on the dikes and they clean our sewerage water. And in most countries, it’s some local governments, like the municipality or provinces or another region doing this. In the Netherlands there are local authorities called water boards, which do just this: regulate the water and clean the water.
On how water board representatives can differ politically:
Houben: You can have a left issue dike and a right wing dike, but not really. There are a few topics that are that you can choose for. Water boards can decide to only concentrate on keeping [dry] feet and clean water, and nothing else. You have local costs, but nothing extra. Water boards can also decide that it’s also important that people enjoy water and they want to cycle along in. And that’s why we can promote our work a little bit, because we have these nice placards where we can show what your water board does. That costs more money. So that’s one thing. What do we want: All these extra services, or do you just want them to do what you’re supposed to do and nothing else, just the basics?
The water boards make costs and divide them up between different groups of taxpayers: households, owners of buildings, mostly home owners, owners of the grounds mostly farmers. And if you say, well, if you were a farmer, you will vote for a party that says farmers shouldn’t pay so much. What they are doing is for the general good, so they shouldn’t pay much. When you’re someone with a house, you may say that it’s not fair that I should pay such a large share. House owners pay almost half of the costs. So that’s why these elections are still important. We all want dry feet, but what do we want to pay for it and who needs to pay for it?
On how taxes for companies and households are determined:
Houben: The pollution tax means the water boards place a tariff for one pollution unit. And households pay for one pollution unit. If you’re one person, you have three pollution units. If you’re more than one person so two three four et cetera. Companies pay either three or the water board goes and measures how polluted the water and then taxes the company for that.
White: So three is the default, and that makes sense as a baseline. I can understand it would take a lot of time and effort to go and figure out each company’s water situation individually, but wouldn’t that be the most fair system, to actually look at how much they’re polluting and then tax them based on that?
Houben: Well with taxes, you always want some equilibrium between fairness and payability of the tax itself. If you are going to every company and measuring how much pollution they produce, the costs of [figuring that out] may be higher than what you would actually get [in taxes].
On why the province of Groningen saw some of the highest increases in taxes in recent years:
Houben: That was a decision of our water boards. Which is a reason to all go and vote. The water boards decided these households have been paying this part of the costs until now, but they should pay a larger share of the costs. So I don’t know what their exact motivation is. The motivation is always we’re doing more for them, so they should pay more because that’s the idea. More interest, you pay more. But I haven’t noticed in the last five years that they’re doing more.
On why water board taxes can vary dramatically from one province to the next:
Houben: If you live in an area where the water board needs to pump all the time to get the water out or where the water is very polluted, you automatically pay more because there is no compensation from the government for differences in costs. So there are cheap areas to live in the Netherlands like in Limburg in the south where the water just naturally flows down.