In the Spring Memorandum, with the plans and the money for this year, the Rutte IV cabinet tries to befriend left and right. Though it doesn’t seem to have worked quite yet.
Significantly more money goes to defense. The minimum wage will rise next year, and not only in 2024 as previously agreed, and the state pension will rise with it. At the same time, slightly less money is going to the billion-dollar funds for the climate, the nitrogen approach and economic innovation. Companies and people with wealth will pay more tax.
Negotiations
It is the outcome of long negotiations in the coalition of VVD, D66, CDA and ChristenUnie, and perhaps also of the round that Prime Minister Mark Rutte (VVD) and Minister of Finance Sigrid Kaag (D66) recently made through opposition parties in the House of Representatives. – to hear wishes and to seek support for the plans in the Senate, where Rutte IV does not have a majority.
The cabinet writes in a letter to the House of Representatives that “a unique combination of extremes” is now occurring. The Dutch economy is recovering quite well from the corona crisis and unemployment is low. But the war in Ukraine is costing money, the prices of food, materials and energy are rising, and consumer confidence is at an all-time low.
This Spring Memorandum is also unique, because for the first time it includes a ‘look-through’ to the budget for the coming years. In this way, the House of Representatives will already know in the spring, and not only on Budget Day, what the cabinet’s financial plans are for the long term. This gives more time to debate it, although the House can only vote on changes for the coming years in September.
Read the article Rutte and Kaag are looking for the back rooms
It is not so unique that these plans were already partly leaked beforehand; a permanent tradition around Prinsjesdag.
defence
The extra money for defense will rise to 2.2 billion euros per year from 2025. This means that the Netherlands will finally comply with the NATO agreement for defense expenditure (2 percent of GDP). The increase in the minimum wage will cost almost 1.5 billion euros next year alone. The AOW increase will cost 1.1 billion euros that year, rising to more than 2.3 billion.
In addition, the cabinet must reimburse tens of thousands of savers who have wrongly paid too much tax in box 3, which costs 3.6 billion euros. A ‘windfall’ is the ruling of the Supreme Court on Friday that the cabinet only has to compensate those savers who have objected in time – and not all savers who have been duped.
To cover all expenses and setbacks, the government will allow the budget deficit this year to rise to 3.4 percent of GDP – actually 3 percent is the maximum within the Economic and Monetary Union.
Furthermore, spread over a number of years, 2.2 billion euros will be cut in the funds for economic growth, the climate and the nitrogen approach. Minister Kaag did not want to call it “cutting” on Friday, but “a reprioritisation”. Fellow minister Christianne van der Wal (Nature and Nitrogen, VVD) also said that the cabinet will work “even smarter and more efficiently” to reduce nitrogen.
The transfer tax on the purchase of a home or land will be further increased from 9 to 10.1 percent; not for homeowners who live in the home themselves, but for investors, for example.
And companies and people with wealth will therefore pay more tax. For example, the increase in the tax-free sum in box 3 is being reversed, which yields 0.3 billion euros annually. In the run-up to Budget Day, the cabinet wants to take a broader look at the tax on labor on the one hand and wealth on the other, in order to reduce wealth inequality in the Netherlands.
Little or nothing has been done with our input
Joost Eerdmans, party chairman JA21
Initial reactions from the opposition are critical. The PvdA, which, together with GroenLinks, can help the coalition in the Senate to a majority, calls the choices Rutte IV makes “lean”. The PvdA considers it ‘good’ that the minimum wage and the state pension are going up, but because of the high inflation, it is of little use to people, according to the party.
“What a shame. What a deception,” tweets PVV leader Geert Wilders. He calls the AOW increase a “cigar out of its own box”, because the increase in the elderly person’s income tax credit will be reversed — which will especially affect older people with a middle income.
Honored
Opposition parties also look back differently on the round that Rutte and Kaag have made. Many parties wanted the AOW to increase in line with the minimum wage, but 50Plus member of the Senate Martin van Rooijen cleverly claims success: “Glad that the cabinet has listened to 50Plus”, he tweeted.
Member of Parliament Joost Eerdmans of JA21, which can also help the coalition achieve a majority, is disappointed. “Rutte is about left,” he appts. JA21 is happy with the money for the state pension and defense, but is critical of the rising government deficit and believes that the funds for climate and nitrogen are actually left untouched. “Little or nothing has been done with our input.”
Prime Minister Rutte did not want to say from whom he expects support in his weekly press conference on Friday. “More roads lead to a majority in the Senate.”
A version of this article also appeared in the newspaper of 21 May 2022