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The Dutch government will decide on Friday whether to step down over an escalating scandal in which tax officials wrongly accused thousands of parents of fraud, plunging many families into debt by ordering them to repay childcare allowances.

The opposition Labour party leader, Lodewijk Asscher, who was social affairs minister in the previous government, resigned over the affair on Thursday, denying he knew the tax authority was “wrongly hunting down thousands of families” but conceding a failing system had “made the government an enemy of its people”.

The prime minister, Mark Rutte, has said he opposes dissolving the current coalition, arguing the Netherlands needs stability amid the coronavirus pandemic, but has not ruled it out. The cabinet will review its position at a regular meeting on Friday.

The four ruling parties in Rutte’s coalition are deeply divided in their response to a damning report on the scandal but are thought to prefer ending their alliance rather than risk losing a no-confidence vote next Tuesday, after a planned parliamentary debate on the report.

The MPs’ report, titled Unprecedented Injustice, was published last month after an inquiry into the childcare benefits scandal that included public questioning of officials up to and including Rutte.

It established that “fundamental principles of the rule of law were violated” by the Dutch tax authority, with fraud investigations into families triggered by “something as simple as an administrative error, without any malicious intent”.

The investigating committee chairman, Chris van Dam, called the system “a mass process in which there was no room for nuance”, with some 20,000 working families pursued for fraud before the courts, ordered to repay child support benefits and denied the right to appeal over several years from 2012.

Some were pushed close to bankruptcy or forced to move house by unjust claims for tens of thousands of euros when the alleged fraud amounted to an incorrectly filled-out form or a missing signatures. Several couples separated under the strain.

Government ministers, MPs, civil servants and court judges all bore their share of responsibility, the report concluded, recommending that “everyone in the apparatus of state should ask how such a thing can be prevented from happening again”.

The government has apologised for the tax office’s methods and in March last year set aside more than €500m (£450m) in compensation, about €30,000 for each family.

The tax authority has also admitted that 11,000 dual-nationality families were singled out for special scrutiny. But prosecutors have declined to open an investigation into discrimination, saying they had found no evidence of criminal wrongdoing.

“Responsibility for culpable acts attributable to the state must be sought in the political domain and not in criminal law,” public prosecutors said last week.

Twenty of the families involved this week took legal action against ministers from three of the parties in Rutte’s current coalition for their role in the scandal, alleging criminal negligence through a failure of good good governance, discrimination and violating children’s rights.

The health minister, Tamara van Ark, finance minister, Wopke Hoekstra, economic affairs minister, Eric Wiebes, former tax minister Menno Snel – as well as Asscher – are all named in the case documents, filed with Dutch supreme court.

The fate of the government hangs mostly in the hands of Rutte’s coalition partners, with at least one leader – Sigrid Kaag of the social-liberal D66 party – saying this week that political consequences from the parliamentary report were inevitable.

If it does collapse, the government would stay on in a caretaker capacity until a new coalition was formed, with general elections due in March and Rutte and his centre-right People’s Party for Freedom and Democracy performing strongly in polls.



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