Their ambitions have been somewhat subdued, but their opportunities have only increased. GroenLinks-PvdA, ChristenUnie and D66 are refining their plans to increase the minimum wage, to tax the purchase of own shares and to increase bank taxes, it became apparent on Wednesday during the General Financial Considerations.
A proposal was previously on the table to increase the minimum wage by 1.7 percent from January 1, 2024. This will now be an increase of 1.2 percent, from July 1 next year. In this way, GroenLinks-PvdA, ChristenUnie and D66 respond to doubts about the feasibility of these and other parts of the package of measures they devised. The AOW and benefits will increase, as is usual with an increase in the minimum wage.
A parliamentary majority in favor of their new plan has already arranged this political bloc, it became clear on Wednesday during the General Financial Considerations. The financial details of the cabinet’s budget plans are central there, together with the many changes that parties submitted two weeks ago during the political counterpart, the General Political Considerations.
Chainsaw
During these General Political Considerations, one opportunity after another emerged to improve the budget. In total, the House agreed to more than 4 billion euros in additional shifts, intended to help all income groups, on top of the 2 billion euros that the cabinet had already invested in a purchasing power package for low incomes on Budget Day.
The Chamber’s wish list was extensive. The minimum wage had to be increased further, petrol excise duties had to be reduced and price increases on energy bills and in public transport should also be prevented. On the other hand, there was a pile of proposed tax increases and other ways to quickly raise a lot of extra money.
This decisiveness came under criticism in the House. The outgoing cabinet immediately reviewed the budget plans of almost all parties with a chainsaw. During the General Political Reflections, Prime Minister Mark Rutte had already expressed his concerns about the financing of all proposals, including his own VVD’s plan to reduce petrol taxes.
On Friday, Finance Minister Sigrid Kaag (D66) went over that again. In a 26-page letter, Kaag explained that many of the proposals adopted were “not in accordance with budgetary rules.” Moreover, in many cases she found the plans rushed and in her view they took little account of all kinds of unforeseen behavioral effects.
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Kaag was critical of, among other things, the intention of GroenLinks-PvdA, ChristenUnie and D66 to significantly increase bank taxes and to tax companies if they bought back their own shares with their profits. This could well lead to companies moving abroad, Kaag suggested, a criticism that also came from the lobby clubs of banks and companies.
By taking the sharpest edges off their proposals, the parties hope to temper criticism. For example, the bank tax should no longer yield 350 million euros, but 150 million euros by applying a lower rate. The tax on share buybacks will not come into effect until 2025, because the government believes that an earlier introduction is impracticable. The size of the entire package therefore shrinks from 2 billion euros, as envisaged two weeks ago, to 1.35 billion.
In the balance
Employers are also not satisfied with this watered-down variant. “All in all, the Dutch business climate is knowingly becoming increasingly endangered,” VNO-NCW and MKB-Nederland said in a response to the amended plans.
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They find a large number of right-wing parties on their side. During the Financial Considerations on Wednesday, MP Eelco Heinen (VVD) spoke of a “terrible package for the Netherlands” and “the fairly exotic coverage plan from the left, in which almost everyone’s income is taxed and which drives companies out of the Netherlands.”
Heinen clashed hard with D66 MP Steven van Weyenberg, who defended the plans and blamed Heinen for the fact that the VVD now wants to use money from the National Growth Fund to lower petrol prices. He referred to a graph that shows that high incomes, with larger cars and more kilometers, benefit from such a reduction, as ING recently calculated.
“I am glad that you appreciate ING so much, because in your plan that company will be gone tomorrow,” Heinen replied. The VVD plan, which also received criticism from Kaag, remains unchanged. Heinen sees the lower petrol prices as a smart use of money that has not yet been allocated, such as the money from the Growth Fund. “It can make all the difference as to whether ordinary families can live to see the future.”
It became once again clear that Rutte IV’s coalition parties have followed their own course since the fall of the cabinet and that little is left of mutual relations. How the cabinet assesses the resulting bundle of plans will become clear on Thursday, when Kaag will once again shed light on all budget proposals in their latest form.