Dutch municipal governments EU’s largest spenders

Comparative budgeting

THE HAGUE - Spending by municipal governments in the Netherlands as a percentage of total government expenditures over the year 2007 was higher than the EU average. Dutch local authorities have limited taxation autonomy and largely depend on central government funding.

Data released by the Central Bureau for Statistics (CBS) also shows that social security spending accounted for about 34 percent of total Dutch government spending in 2007. Including these budget lines, central government spending accounted for two-thirds of the Dutch government’s budget. In comparison, the EU’s average was a fraction higher at 68 percent.

Local governments in the Netherlands, which include the country’s 26 Water Boards (Waterschappen), 443 municipalities and 12 provinces, are responsible for about 34 percent of all government spending. This percentage makes the costs of local governments in the Netherlands one of the highest in the EU. Since government structures in the Netherlands do not mirror those in other EU member states, the comparison is not exact. For example, provinces in the Netherlands have a largely administrative role, while states in Germany and other countries have legislative power.

Fees

Local Dutch governments derive no less than 68 percent of their revenues from the central government in The Hague. The degree of dependency on state funding is higher only in the United Kingdom and Malta. The local governments in the Netherlands have more freedom as to how they regulate their budgets than in other countries.

In the Netherlands, municipal governments receive 8.6 percent of their revenues from local taxes, the lowest in all of the EU. The fees for passports and driving licenses are an important source of revenue for all local governments throughout the EU. Other important sources of revenue are interest on investments, dividends and EU money transfers. Dividends are important for provinces owning shares in energy companies.