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Dutch government to greatly reduce child benefits06 September 2013, by Alexandra Gowling
The Dutch government has announced plans to cut the number of benefits available to people with children.
Currently, parents can apply for up to 11 benefits for their children up to the age of 18. The government plans, in its upcoming Prinsjesdag budget, to cut those benefits to four.
The benefits that will continue are the child allowance, the child benefit (an income-dependent allowance for the cost of children), the combination discount (a fiscal break for combining work and caring for children) and the childcare allowance. The other seven benefits will be merged with these four or abolished.
Minister of Social Affairs Lodewijk Asscher is proposing to reduce by 800 million euros the amount of money spent on child benefits in the Netherlands, which currently costs about 10 billion euros per annum.
Child benefits should encourage work
The new arrangements are designed to encourage poorer parents to work. According to Asscher, if parents are entitled to benefits for their children due to having a low income, they are worse off if they then wish to start work, as they will lose the subsidy that may be greater than their wage.
Under the current system, a single parent with two children between six and 12 years will be 1.000 euros a year out of pocket if he or she wants to work four days a week. These changes the child benefits should see a person in this situation end up 2.100 euros ahead.
Now, parents can receive the children allowance (kinderbijslag) of 274 euros a quarter per child aged from 12 to 17 years. After July 1 2014, that will drop to 246 euros, and will continue to drop each year until it reaches 192 euros in 2016.
The allowance for children aged 6 to 11 years will also drop to the same amount at the same time, from 233 euros now.
Photo by Flickr user dfarrell07
One thing that Asscher said he will not be doing, despite rumours, is make the children allowance income dependent; but nor will he index it for inflation.
While the children allowance will be dramatically decreased, the income-dependent child benefit (kindgebonden) will rise. From 2015, the benefit for the first child will be increased by 29 euros per year, while the amount for a second child will go up by an enormous 536 euros, meaning parents will receive the same amount for first and second children.
The income and means test for the child benefit will also fall. For single parents, this will be from 26.147 euros currently to 19.767 euros, while the means test will rule out those whose wealth sits at 80.000 euros above the wealth exemption. Added together, the amount beyond which a parent is ineligible for the child benefit will be 101.139 euros.
The amount that people on a low income are eligible for will also increase, partly as compensation for abolishing the free schoolbooks scheme.