As reported earlier in the Holland Times, about 8,500 Dutch parents have been wrongfully accused of childcare allowance fraud by the Belastingdienst (Tax and Customs Administration). Many had to pay back thousands of euros, and were not allowed to make payment arrangements, causing serious debts for many parents.
What went wrong?
Many parents had to pay back a lot of money after being accused of fraud. This is because the Belastingdienst pays out very high amounts of childcare allowance to parents, without checking whether they qualify for the allowance in the first place. This means there is a problem when the allowance turns out to be too high, for example because the family had a higher income than estimated, or made a mistake in filling out the application form. The excess has to be paid back to the Belastingdienst. It is important to note that the policy to recover the allowance was up until recently implemented even for the smallest administrative mistake committed by parents.
But here is the thing: many families on low incomes are not able to pay back immediately, because they have already spent the money they received. Usually they can make a payment arrangement, meaning they have to fork up the money over a long time.
The reason for fraud
The childcare allowance scandal has left many families in a very difficult situation. This has left many wondering: who is to blame?
An investigation commission led by former Minister of Justice Piet Hein Donner concluded that the government made crucial mistakes with regard to childcare allowance, specifically the House of Representatives and the last six cabinets, which designed the legislation.
“No one can blame tax officials for implementing the law,” said Donner. The blame lies with the politicians who drew up the policies and the judiciary that was in charge of interpreting them, which it did quite harshly. In the end, the parents have become the victims of legislators, administrators and judges.
The Belastingdienst had asked 9,400 parents of childcare companies suspected of fraud to provide additional evidence to demonstrate that they had met all the conditions to be eligible for childcare allowance. This was after the State Audit Service had gone through 149 fraud allegations, conducted by the investigation team since 2013. The results were terrible. In more than one in three cases, the Belastingdienst ruled that the parents had to repay the allowance, which in some cases they had received for several years.
With regard to childcare agency Dadim in Eindhoven, the committee noted that the Belastingdienst approached the parents with ‘institutional bias’. The agency discontinued payments and claimed back the money without giving parents a real chance to defend themselves against the allegations.
Who are the fraudsters?
The Donner Committee emphasized that a number of childcare agencies under investigation had indeed committed fraud. Some of its owners had actually been convicted. Agencies that had committed fraud included De Parel, De Appelbloesem, De Stroom and Family House. The owner of the latter, former Imam Abdullah Haselhoef, was said to have received 2.2 million euros in childcare allowance on the basis of false applications. He was sentenced to twenty months in prison in 2016.
However, it wasn’t just the owners who committed fraud. In some cases, the parents were also involved. For example, parents at De Stroom and Family House were proven to have taken advantage of the fraud by their agency. Even in the CAF-11 case that started the whole allowance affair, not all parents went free. Of the 309 Dadim customers, 22 received no compensation, because it was proven that they had committed fraud. But it is important to note that not all parents were culprits. Most parents did not know that their childcare agencies were committing fraudulent activities.
In the end, the actual picture of the allowance scandal doesn’t look so black and white as it had before. According to Donner, the Belastingdienst did not treat all parents as frauds; and not all parents were innocent.
Way forward for disgruntled parents
It is almost impossible to offer all parents who feel duped an appropriate solution. So, Donner does not promise a generic compensation scheme for parents. Instead, he recommends that the files of a limited group of 1,800 parents should be thoroughly re-examined. The parents would only be able to claim the compensation that the Committee awarded last year, if the reexamination reveals that they didn’t commit fraud.
However, Donner advises for a limit to be drawn: only those parents who had to repay at least 10,000 euros can request a ‘reparation payment’. Lastly, Donner warns politicians against feeling too generous to compensate all parents in the scandal. He sees this as setting a dangerous precedent, reversing fifteen years of legislation. Instead, he supports viewing each case individually, even though will require a lot of time and resources from the Belastingdienst.
Finally, the system of allowances might be fundamentally changed, so that parents do not receive a payout in advance, but only when it is clear how much money they are actually entitled to.
Edition 10 April, by Stephen Swai