Talks on tax reform between the ruling coalition and four opposition parties collapsed on Monday night, leaving the government’s plans in tatters.

According to D66 leader Alexander Pechtold, the plans as they now stand do not do enough to encourage job creation and are not ambitious enough.

Kees van der Staaij, leader of the fundamentalist Christian SGP, said the negotiations had been ‘fair’ but that the differences between the parties is too great. The cabinet must now decide what to do next, he said.

The government needs the support of so many opposition parties to make sure the reforms are passed by the upper house of parliament where it does not have a majority.

Junior finance minister Eric Wiebes said he is disappointed at the failure. ‘There is no majority in favour of major reforms,’ he said. ‘Now we will have to see what we can do to reduce taxes in September’s budget.’

The collapse of the talks means the controversial rise in value added tax on all but food is now unlikely to go ahead.

However, the decision to cut income tax rates and reduce the cost of labour can be implemented because the Christian Democrats have already said they will support that part of the reform process in the senate.