The Dutch tax authorities screened tax declarations for donations to mosques and other Islamic organisations. Such donations were seen as an indicator for a potential fraud. This working method was prescribed by the manual for analysing all income tax declarations. The recent revelation is the newest scandal in what is known as the Dutch childcare benefits affair.
Short overview of the benefits scandal
The childcare 'benefits affair' in the Netherlands is about much more than just discrimination. It is about the deliberate withholding of documents by Ministers towards the House of Representatives, lack of access for cilivians to the courts - partly as a result of the phasing out of subsidised legal aid – and a marginal review by the courts, harsh enforcement of policy and much more.
In 2019, Trouw and RTL Nieuws published about the reclaiming of childcare benefits by the Tax Authorities. The benefits were being reclaimed because of a suspicion of having committed fraud. Many parents ended up in big financial problems. In 2020 it turned out that the Tax Authorities worked with risk profiles for extra checks on income tax returns between 2012 and 2015. Having a second nationality was one of the criteria on which selection was made. It also emerged that the Tax Authorities used a secret registration system, called FSV, for 20 years. More than 180,000 Dutch citizens were on a list of possible fraudsters.
People who were on this list were not aware of this and could not oppose it. 60% of all the people on the FSV list were on it after they were identified as possible fraudsters in the first selection of the income tax return. Those listed in FSV were then under intensive surveillance and faced, among other things, stricter rules for dealing with debts, such as fewer possibilities for debt remission and consolidation. People were not always removed from the list, even though their declarations were in order: some 7,400 FSV-registered citizens have been under intensive surveillance for too long.
At the end of 2020, a parliamentary interrogation committee investigated the course of events surrounding the childcare benefits affair. The secret FSV system was taken offline. All this ultimately led, in early 2021, to the fall of government, headed by prime minister Mark Rutte. The consequences for affected citizens turned out to be huge. Around 50,000 parents have now applied to the Tax Authorities for a comprehensive review of their case because they are victims of the benefits scandal. More than 1,000 children of parents who were victims of the benefits affair were taken from their parents and placed under state supervision between 2015 and 2020.
Origin, nationality and religion
This week brought new revelations. The Tax Authorities checked people with a 'non-Western background' more often for fraud, not only when checking income tax and benefits, but also when checking (starting) entrepreneurs. As a result, they could end up on the FSV list.
As described above, it was already known that nationality was part of the risk profiles. However, the two new reports (here and here) by research bureau PricewaterhouseCoopers show that the Tax Authorities also explicitly selected on the basis of origin, religion and 'foreign surnames'. The examples mentioned below are from the period 2008 to 2019. The risk profiles contain selection criteria such as: "immigrant (non-Western fellow countrymen)", "of foreign origin", "entrepreneurs of immigrant origin" and "taxpayers whose surname ends in ...IC". The manual for analysts who make the initial selection of tax returns at the gate contains instructions for assessing the risk of fraud in the case of donations. It mentions nationality, Islamic organisations and mosques as selection criteria.
Battle against ethnically loaded risk profiles
In March 2021, Controle Alt Delete initiated a ballot agreement on combating fraud. In the agreement, the signatories agree that during and after the formation of the government, they will make an effort to ensure that government agencies no longer use ethnicity to fight fraud. The agreement was signed by the incumbent parties VVD, D66, GroenLinks, SP, PvdA, Partij voor de Dieren, DENK and 50 plus. In addition, it was signed by aspirant parties Bij1 and Volt. Shortly after the elections, the ballot agreement was adopted as a motion in the House of Representatives. Only PVV, FVD, JA21 and SGP voted against it.
In February 2022, a new parliamentary inquiry into fraud policy and service provision began. During a round table discussion in preparation of this parliamentary inquiry, Controle Alt Delete called for attention to be paid to discrimination and racism during the enquiry as well. This request was heeded. In the research design, the use of (discriminating) risk profiles is mentioned as one of the main goals of the inquiry.
Our vision: taking action
In 2020, the Dutch Personal Data Authority (Autoriteit Persoonsgegevens or AP) carried out an investigation into the benefits scandal. According to the AP there was no racial discrimination, but they did find discrimination on the basis of nationality. With the benefit of hindsight, the AP was wrong. The AP should acknowledge this and learn from it.
The revelations about the modus operandi of the Tax Authorities show what ethnically loaded risk profiles look like. The same working method is also used by the police and the Dutch Border Police. The government must now get to work, starting with implementing the motion calling on government agencies to stop using ethnicity to combat fraud.
The registration system FSV (the "black list") was taken out of the air in February 2020, but the decision rules for assessing the risk of fraud at the gate are not tied to FSV. This means that, today, it is still possible that selection decisions are made on the basis of personal characteristics such as nationality, origin or religion. The PWC research does not exclude that this no longer happens. The Minister must assure the House of Representatives that this no longer happens.
According to the Minister for Tax Authorities, it was "completely unacceptable" that selection was made on the basis of nationality and outward appearance. However, the Minister did not want to speak of racism. With the knowledge of now, the Cabinet should answer the question whether these kinds of selection decisions are in violation of the discrimination prohibition. And if they do not think so, the question arises as to when something is in violation of the prohibition on discrimination?