Prinsjesdag: The Dutch government’s 2023 budget and what it means for you
On the afternoon of Tuesday, September 20, the Dutch government announced the official budget for the coming political year. Here’s everything you need to know about Prinsjesdag 2022, and what the 2023 budget means for you.
Every year, on the third Tuesday of September, The Hague hosts a key date in the Dutch political calendar, as the government announces the budget for the coming year and King Willem-Alexander officially opens the next Dutch parliamentary season. After two years of rather low-key celebrations, 2022 marked a return to the more traditional customs that go hand-in-hand with Prinsjesdag (“Prince’s Day”).
Giving his annual speech from the Koninklijke Schouwburg, the Dutch King emphasised how troubling he found it that an increasing number of people were struggling to pay their bills, adding that everyone was living "in a time of contradictions and uncertainties." King Willem-Alexander also addressed the growing feelings of distrust amongst the general population, specifically in regard to the Dutch government and political system. "It is worrying that people in a mature democracy are losing faith in government," he said.
The King also mentioned a number of the "social and environmental limits" that "our current way of life" continued to face, namely the housing shortage, the childcare benefits scandal (toeslaganaffaire), the ongoing fall in purchasing power, and the lack of accommodation for refugees.
The Dutch economy in 2023
"The economic prospects for 2023 are uncertain, due to large fluctuations in energy and raw materials prices and rising inflation," reads a statement on the government's website, highlighting the effect of the ongoing war in Ukraine on prices in the Netherlands - and the cabinet expects prices will continue to rise next year.
Economic forecasts emphasise that it's "difficult to say how the economy will develop," however the government expects the Dutch economy will grow less rapidly in 2023. "Economic growth of 1,5 percent of the gross national product is expected," the forecast reads, "But due to the uncertain situation in the world, things can also turn out differently. It is also possible that economic growth will come to a standstill."
This Prinsjesdag also saw the government highlight the labour crisis, as the number of job vacancies continues to outnumber those looking for work. The cabinet hopes that improved working conditions and higher wages will help to combat this issue in the new year.
The 2023 Dutch governmental budget
Overall, the cabinet plans to spend 395 billion euros next year. Here’s a brief overview of the key announcements made on Prinsjesdag:
Income, taxes and purchasing power
In a historic move to offset the rising cost of living, the Dutch government is investing 17,2 billion euros in measures designed to boost the purchasing power of citizens and residents. These measures include:
- Higher minimum wage - The Dutch minimum wage will go up by 10 percent, affecting pensions and a number of other benefits including the child benefit, rent allowance (plus 16,94 euros per month) and healthcare allowance (plus 412 euros).
- Lower income tax - Workers that fall into the lowest tax bracket will see their income tax rate fall by 0,11 percentage points next year.
- Higher wealth and business taxes - The wealth tax, as well as corporate taxes and the mining levy (a tax targeting the profits of energy companies), will be increased from January.
- Higher transfer tax - The transfer tax on the sale of business properties will increase, as will the tax rates for landlords.
- Higher tax credit - The labour tax credit for people working in the Netherlands will increase.
- Higher student grant - Students living away from home will be eligible to receive an additional 165 euros per month.
Measures to combat rising energy prices
In addition to the above measures designed to boost purchasing power, the Dutch government is taking a number of steps to combat the high cost of energy:
- Tax cuts on fuel and energy - The government has extended the tax cuts on fuel and energy until at least June 2023.
- Energy allowance - Low-income households will once again be eligible for a 1.300-euro energy allowance in order to help cover the cost of utilities.
- Cap on energy prices - The government and energy companies have agreed to cap energy prices. The price cap will apply to the first 1.200 cubic meters of gas and the first 2.400 kilowatt hours of electricity, and will remain in place until at least the end of next year.
- Lower energy bills - Until the price cap takes full effect, it will be introduced in instalments from November 1, meaning that households should already feel the benefits before the end of 2022.
According to calculations by the Netherlands Bureau for Economic Policy Analysis (CPB), the measures should boost the purchasing power of households by an average of 3,9 percent in the new year. The cabinet expects that the price cap on gas and electricity will save households an average of 2.280 euros a year.
As was rumoured to be the case, Tuesday saw the government confirm that the price of health insurance would increase by approximately 11 euros a month from January. While this figure is merely a guideline set by the government, it is widely believed that insurers will not deviate from the figure.
To better protect small children from the Rotavirus, the government is investing 15,4 million euros in a new scheme under the national vaccination programme, which will see children given a drink that should prevent them from becoming infected.
An extra 280 million euros will be invested in elderly care, while 90 million euros is being made available for the prevention of mental and physical health issues, and to encourage members of the public to live an active and healthy lifestyle. Money is also being invested to ensure that healthcare remains affordable and accessible.
Once again, the government is putting aside funds (5,2 billion euros) to cover measures put into place to curb the spread of coronavirus and to ensure the country is better prepared for any future pandemics.
Housing and infrastructure
The cabinet is continuing to work towards the goal of building 900.000 new homes by 2030, two-thirds of which will be affordable housing. A total of nearly 11 billion euros has been made available for this project. 2023 will also see 15.000 so-called fled homes (temporary new-builds or short-lease properties which are rented out for a fixed period of time) built in the Netherlands.
300 million euros is also being made available to help households cover the costs of ensuring their homes are properly insulated, and from July 2023 approximately 510.000 low-income households will be eligible to receive a rent reduction of an average of 57 euros per month.
Finally, 4 billion euros will be invested in the maintenance of roads, waterways, water management, and railways.
In an attempt to combat the apparent fall in the performance of primary and secondary education, the government is investing 1 billion euros into improving the quality of education, 1 billion euros into tackling the inequality of educational opportunities, and 800 million euros for the training and hiring of teaching and support staff.
A further 1 billion euros has also been set aside to cover the compensation for students who accrued debt under the current student loan system.
The government will continue to invest in various climate policies with the aim of working towards a "sustainable, fossil-free and circular Netherlands by 2050." Funds are being set aside to cover the cost of transitioning to more sustainable and renewable energy sources (i.e. wind and hydrogen), as well as the construction of new nuclear power plants.
Crime and security
100 million euros have been earmarked to invest in measures to prevent vulnerable young people from turning to crime. A further 100 million euros will be invested in improving the country's fight against drugs.
Defence spending will be increased to 2 percent of the Gross Domestic Product (GDP), amounting to approximately 5 billion euros.
The Netherlands is setting aside almost 4 billion euros for humanitarian and military aid for Ukraine, and for the reception of Ukrainian refugees in the Netherlands. Similarly, between 2023 and 2027, an additional 1 billion euros has been earmarked for the reception and support of refugees seeking asylum in the Netherlands in times of crisis.
Once again, the Royal Family will see their annual budget increase in 2023: King Willem-Alexander, Queen Máxima and Princess Beatrix will receive around 450.000 euros more for their income and personnel and material costs. Princess Amalia has said she will waive her income so long as she is enrolled at a university. 880.000 euros has also been set aside to cover the cost of flights for members of the Royal Family.
Life in the Netherlands in 2023
As has been emphasised by both the Dutch government and King Willem-Alexander, the social and economic outlook for the new year remains uncertain. It is widely hoped that the cabinet's move to boost purchasing power will successfully support the finances of households and families across the Netherlands.
However, members of the opposition have already spoken out against the plan, with Geert Wilders, leader of the Party for Freedom (PPV) arguing that ministers have waited too long to act. Similarly, GroenLinks leader Jesse Klaver criticised the cabinet for putting together so many of the details at the last minute.
Thumb: fotografiekb via Shutterstock.