Dutch American Friendship Day

Toespraak | 17-04-2007

Speech van de staatssecretaris van Financiën op het Dutch-American Friendship Day te Amsterdam, 17 April 2007

I. Introduction

Ladies and gentlemen,

I am honoured to speak to you today at the celebration of Dutch-American Friendship Day.

As you may have noticed, I’ll be speaking in English. But if things had turned out differently, I could have been talking to you in Dutch. Because after the Dutch bought Manhattan from Native Americans in 1626, Dutch actually became the lingua franca of the surrounding area. Even Native Americans learned to speak the language.

You can still find traces of Dutch from this period in the English spoken in America today. In fact, I have a personal example. My name is Jan Kees. It is from ‘Jan Kees’ that the term ‘Yankee’ is derived. The interesting thing is that a Yankee, at that time, was a Dutch settler, and the term wasn’t especially respectful. I’m not sure whether or not I should be pleased with this link, but in any case, the shift in the meaning of the word reflects the dynamic cultural relationship between the Netherlands and America.

The friendship between the United States and the Netherlands goes back a long way. The relationship became ‘official’ in 1782 with the signing of the Treaty of Amity and Trust by John Adams. So you could say that Friendship Day in 2007 marks 225 years of official friendship. Friendship that was notably expressed in the unstinting support given to the Netherlands by the US during and after the Second World War. And the support given by the Netherlands to the US in the fight against terrorism.

Just as important are the excellent economic ties between the Netherlands and the US. As State Secretary for Finance, I value these ties highly. Let us look at them more closely.

II. Investments and economy

The Dutch central bank’s figures for 2005 show that the Netherlands is the fourth biggest investor in the US, contributing over 78 billion euros. And the US, with almost 70 billion euros, is the biggest investor in the Netherlands. These reciprocal flows of investment underline the healthy economic relations between our countries. And they are encouraged by both the US and the Dutch governments.

Openness and an international outlook have long been hallmarks of the Dutch economy. And after a number of lean years triggered by a global downturn, the Dutch economy is growing again. Our low inflation, low interest rates and stable public finances make for a sound economic environment. An environment strengthened yet further by our membership of the eurozone.

The Netherlands has the biggest container port in the world: Rotterdam. And a leading European airport: Schiphol. In other words, an excellent physical infrastructure. And it can draw on a highly qualified pool of talent who speak the main international languages.

My remit as state secretary includes taxation. Dutch tax policy also contributes to the investment climate:
• we levy no withholding tax on outgoing interest and royalties;
• we offer the participation tax exemption;
• our Tax Administration can offer prior assurance by means of advance pricing agreements and advance tax rulings;
• we have built an extensive network of tax treaties. Our treaty with the US now allows the transfer of certain intercompany dividends free of withholding tax.

These factors partly explain why The Economist Intelligence Unit rated the business environment in the Netherlands as one of the best in the world. Many international companies agree, and have set up their European headquarters in the Netherlands. Among them are many American companies. I am pleased that some of you are represented here today.

I understand that the American business climate is also excellent. It is no coincidence that so many representatives of Dutch companies are here to celebrate our good relations with the US. I know for a fact that the US greatly values its trade relations with the Netherlands.

David Bohigian, the Assistant Secretary for Market Access and Compliance of the US Department of Commerce, confirmed this on his recent visit to the Netherlands.

He emphasised that our two countries already enjoy the best trade relations in the world. And that the US would continue to seek ways to strengthen investment and trade relations with the Netherlands.

III. Dutch tax policy

We share this aim. The Netherlands will also continue to focus on maintaining a good climate for investment from the US. For many years, the Dutch government has been assisting American companies that wish to invest in the Netherlands through the Netherlands Foreign Investment Agency. The NFIA knows all the ins and outs of investment decisions.

The Dutch investment climate for companies has been getting even better. Corporate income tax reforms and changes to tax treaties have ensured this. I intend to continue in the same vein.

In the years ahead Dutch tax policy will in any event encourage innovation and entrepreneurship. Innovation is the lifeblood of growth. Standing still means going backwards. We are considering increasing access to innovation grants. And broadening the applicability of the special 10% tax rate, introduced at the beginning of 2007, for profits on patented inventions that a company develops itself.

New businesses account for a substantial portion of economic growth. I know from experience that it’s not always easy when you’re first starting up. So I intend to introduce measures that make it more attractive to start up your own business.

I also intend to reduce the compliance burden for business taxpayers. This will cut costs for both business and the government. Many people in business are irritated by the amount of information that they have to provide to the tax authorities. And sometimes it’s information they have already provided. Often it is unclear why information is needed and what will be done with it.

In order to overcome these irritations, agreements should be made in advance as to how, and how often, the tax authorities will perform checks. This way the authorities will work on the basis of trust, instead of mistrust. And this will inspire greater trust in the authorities on the part of entrepreneurs.

I’d like to address one more topic before I finish: the environment. I think we all know that global warming is largely caused by human activity. Al Gore’s documentary, An Inconvenient Truth, bore powerful testimony to this fact. And we know that climate change is a truly global problem. Floods and hurricanes, and other natural disasters caused by global warming, don’t respect national boundaries.

As State Secretary for Finance, I want to do all I can to halt global warming. I aim to do this by putting in place a greener tax system. Taxes on packaging and on air travel, and bigger tax breaks for economical cars – these are some of the measures I envisage. By putting a higher price tag on behaviour that harms the environment, we can make consumers aware of the impact of their choices. I hope that this will help generate broad support for eco-friendly initiatives.

It is also my hope that the friendship between the Netherlands and the US will help boost support for eco-friendly initiatives in the US, too. As I have already said, climate change is a global problem.

IV. Closing remarks

I’d like to finish by telling you a little more about my background. When I was a student, I set up an IT business with a friend. We started out running operations from an attic, but we soon outgrew those premises. The business blossomed into an international enterprise. That’s when I learned from experience the importance of an environment that is attractive to entrepreneurship and investment. The figures I mentioned earlier on reciprocal investment would suggest that there’s not much wrong with the investment climate of our two countries.

But we need to keep it that way. And our friendship provides the basis for this. We trust each other and our economies will continue to grow to our mutual benefit. What started with a five million guilder loan from Dutch bankers to the US, personally negotiated by John Adams, lives on today in reciprocal investments running into tens of billions of euros. Let us be sure to always cherish the legacy of John Adams.

Thank you.