News item | 28-04-2023 | 13:29
The government is making more than € 22 billion available for the coming years to do justice to the suffering of the affected residents in the earthquake area. The government is also making an extra €1.3 billion available for the recovery operation Supplements. This is necessary for compensation, tackling debts and supporting victims and their children. Municipalities and provinces will receive € 1.3 billion from 2027 through the municipal and provincial fund for a stable, solid and sustainable financial basis. From 2027, the municipal and provincial funds will be indexed based on the development of the gross domestic product. The costs of rising interest rates are covered for € 2.5 billion. This is apparent from the Spring Memorandum approved by the Council of Ministers. Finance Minister Kaag sent the Spring Memorandum to the House of Representatives today.
Big challenges
With the investments from the coalition agreement, an expansive fiscal policy has been chosen. This enables the government to work on the priorities set and the necessary transitions in the field of climate and nature. The drastic events of the past year have led to setbacks on the budget. For example, the cabinet has set a price ceiling to dampen the effect of high energy prices. In addition, the cabinet supports Ukraine, which is still facing a terrible war. The increased influx of asylum seekers also leads to higher costs and the increased interest rate leads to higher expenditure on the national debt. The government has chosen to cover the extra costs for the asylum chain up to and including 2026 and to cover the interest for € 2.5 billion for the increase during the government’s term of office. In addition, the government has also released resources for a number of priorities, such as Groningen and Supplements.
These costs have been covered, among other things, through windfalls, such as a smaller influx of students than estimated and lower expenditure on social security. There is also money available that was budgeted, but not yet spent; the so-called ‘depletion’. The government also had to take a number of structural measures to arrive at a balanced package, such as ending the STAP budget and tailoring the personal budget.
Minister Kaag: ‘With the investment agenda from the coalition agreement, a conscious choice was made for an expansive fiscal policy. In the spring decision-making process, the cabinet will take joint responsibility for ensuring that the budget covers as much as possible, also for the rising interest rates during this government’s term of office. To avoid passing the bill on to future generations. This is the only way we can meet the major challenges for the future.’
EMU balance
The budgetary tasks have been resolved as much as possible within the budget. The so-called EMU balance for the coming years is estimated at around -3%. This value is around the maximum balance of -3% agreed by the member states of the European Monetary Union (EMU). The government debt or EMU debt is estimated at 49.2% of gross domestic product (GDP) in 2023, after which it will gradually increase to 55.6% of GDP in 2028. This means that the Netherlands will remain below the European limit of 60 throughout the government’s term of office. % GDP.
Tax measures
With this Spring Memorandum, the government is taking decisions on the costs for 2024 and beyond. The government will tackle a number of tax constructions. It has also been decided to take a number of measures that are now being worked out for the 2024 Tax Plan, such as the further refinement of the bridging legislation in box 3. The Spring Memorandum contains an interim status of the coverage statements that have arisen due to the lower yield of the internationally agreed minimum level taxation (Pillar 2) and the postponement of the introduction of the new box 3 system. Final decision-making will take place in August and will then be presented in the Budget Memorandum.
Ambitious investment agenda
With the investments in the coalition agreement ‘Looking at each other, looking ahead to the future’, an expansive budget policy has been chosen. With this, the government is working on priorities for social security and equality of opportunity, democratic legal order, security and a strong society, the international context, sustainability, health and the economy. This will also enable the government to initiate the necessary transitions in the field of climate and nature. Based on these priorities, the government is working towards a sustainable, prosperous country for current and future generations, in which all residents can participate according to their ability. The government has opted for this in the coalition agreement and considers these investments to be of great importance, especially for future generations.
Multiannual Spring Note
Just like last year, this Spring Memorandum also provides a preview of the budgets for the coming years. Evaluation shows that stakeholders such as the Council of State, the King’s Cabinet and the Tax and Customs Administration consider this a desirable improvement. This is expected to inform parliament earlier about the decision-making process. This is more transparent, leads to better information provision and gives parliament more time to discuss the budget and the Tax Plan package. The complete budget and the Tax Plan will follow as usual on Prinsjesdag.