(Updates with comment from realtors in seventh paragraph.)
July 1 (Bloomberg) -- The Netherlands will levy a special tax on its banks to raise 300 million euros ($435 million), enabling it to cut the duty on house transactions in an effort to revive the housing market.
The Dutch government will today decide to reduce the transaction tax to 2 percent from 6 percent for one year, according to two people familiar with the matter. They declined to be identified because the plan hasn’t been made public.
Rabobank Group, the biggest Dutch mortgage lender, expects average house prices to fall 2 percent in 2011 and 2.5 percent next year after dropping 2 percent last year and 3.3 percent in 2009. Last year, 126,127 homes were sold compared with 202,401 in 2007, according to national statistics bureau CBS.
The Netherlands, the fifth-largest economy in the euro region, will miss out on 1.2 billion euros of annual tax income because of the measure. To make up for the shortfall, banks will be taxed based on their risk-bearing liabilities, one of the people said.
In separate measures, companies that lend money to foreign subsidiaries will no longer be able to deduct interest payments from corporate tax, resulting in 340 million euros of extra tax income, according to the people. The government will also cut tax-exempt savings from gross salaries, yielding 500 million euros, they said.
While the Amsterdam-based Dutch association of banks NVB criticized the planned tax and said it may hurt mortgage lending and the domestic economy, realtors welcomed it.
“This is a good signal to help the house market on its way,” Ger Hukker, chairman of the NVM realtors association, said in a statement from Nieuwegein, the Netherlands. “It’s great news for every home buyer and seller.”
Finance Minister Jan Kees de Jager last year extended a 2009 increase of the limit for mortgages under the National Mortgage Guarantee plan to 350,000 euros from 265,000 euros, seeking to shore up the housing market. That plan compensated homeowners for 35 million euros of losses due to forced sales in 2010.
Declarations are forecast to rise to 2,000 this year from 1,341 last year, the organization handling the guarantee plan said on its website today.
--Editors: Jennifer M. Freedman, Leon Mangasarian
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