Local government to a large extent financially dependent on The Hague

The local government level is fairly comprehensive in the Netherlands. But local government, including municipalities and provinces, is  to a large extent financially dependent on The Hague, where the central government has its seat.

Size of the central government

Including statutory social fundscentral government spending in The Hague accounts for 66 percent of the total government budget. The average for the EU is 68 percent. 

The remainder of the total government budget is allocated to the local government. The local government sector in the Netherlands is among the larger ones in the EU. In various other countries, part of the total budget is allocated to federal states. The Dutch government system does not include federal states.

Government spending at the various levels of government, 2007


Revenue local government in the Netherlands limited

No less than 68 percent of local government revenue comes from the central government. The degree of dependency is only higher in the United Kingdom and Malta. On the other hand, the local government level has more freedom to decide how to spend revenue from central government transfers.

Local government revenue, 2007


Local government in the Netherlands receives only 8.6 percent of its revenue from local taxes. This is the lowest percentage in the EU, save for Malta, which has no a local government level. An important source of revenue for local governments in Europe, including the Dutch, is the sale of passports and driving licences.  Revenue from interest, dividends and EU money transfers are also important sources of revenue. Dividends are important for provinces owing shares in energy companies.

Decentralised European countries with respect to budget and revenue sources are Switzerland (non-EU), Sweden and Finland.

Peter van Maanen