With various proposals to improve the purchasing power of citizens, the House of Representatives wanted to plow the national budget by more than 4 billion euros. Plans such as raising the minimum wage, extending low fuel taxes and introducing an air passenger tax for private aircraft could count on a parliamentary majority, but the outgoing cabinet has strong doubts about their financial feasibility.
In 26-page letter published on Friday Outgoing Minister Sigrid Kaag (Finance, D66) takes stock of the financial substantiation of the proposals per motion. In many cases this falls short, or the purchasing power consequences are insufficiently guaranteed. It is therefore highly questionable whether the coalition will carry out the motions. Once again because the budget deficit would rise above the European budget limit if the plans were realized.
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One of the proposals is to increase the minimum wage by 1.7 percent from next year. According to the motion by GroenLinks leader Jesse Klaver, the cabinet will pay the required 1.2 billion, among other things, by taxing the purchase of own shares at the same time as the payment of the dividend. Kaag has practical and financial objections: according to her officials, it is not possible in the short term because the financial coverage is “not in accordance with the budget rules” and a possible increase requires a legislative change.
Gasoline prices
According to the cabinet, a VVD plan not to increase excise duties on petrol and diesel cars and to reduce energy taxes by 2024 will have benefits for “all Dutch people”, while the coalition specifically wants to improve the purchasing power of “vulnerable households”.
Covering the costs – 699 million euros for petrol and 545 million for diesel – has not been sufficiently detailed in the cabinet’s view. Another point of criticism is that households without a car or with an electric variant have “no benefit”, while this applies to motorists with a combustion engine, “especially if they drive many kilometers in a less economical car”.
It is now up to the House of Representatives to adjust the financial coverage based on the government’s criticism. MPs can then submit their improved proposals during the General Financial Considerations next week. Then parliament debates with Minister Kaag. The cabinet itself previously presented a purchasing power support package of 2 billion euros.
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