The outgoing government of the Netherlands has announced its “light” budget ahead of the national elections in November. Though the cabinet was keen to make necessary changes, the custom for resigned cabinet ministers in the Netherlands is to leave substantial changes to the incoming parties.
Despite the parties trying to stick to the custom for resigned ministers, there was one significant change that the government felt was necessary at this time - the allocation of two billion euros to tackle declining purchasing power for low and middle-income earners. "A caretaker cabinet requires restraint, but at the same time the future does not wait,” outgoing Finance Minister Sigrid Kaag explained in a copy of the budget leaked to NOS.
The concerns about purchasing power come after a tough financial year, which saw many people in low-income households struggle during periods of high inflation and rising energy bills. A report published by the Bureau for Economic Policy Analysis (CPB) earlier in 2023 warned that poverty could rise to affect one million people across the country if no intervention was planned regarding purchasing power.
The overall message of the budget for the next year is clear: the Netherlands must focus on tackling poverty. Finance Minister Kaag admitted in an interview with the ANP that though the budget is focused on reducing poverty in the country, it does not read as a “total success story” and that the package announced was the largest possible given that the cabinet collapsed earlier this summer.
Most of the money allocated to the poverty reduction plan will be distributed as child benefits. Allowances will be increased for the first child to 750 euros per year (equivalent to 62,50 euros extra per month) and a maximum of 883 euros per year for the second and further children (73 euros extra per month).
In order to cover the 2 billion euros set aside to reduce poverty, the government has made the decision to increase several taxes. The highest income earners in the Netherlands will have their taxes adjusted for less inflation than before - meaning that those in the 45,9 percent tax bracket will pay tax on a larger portion of their salary. The cabinet has stated that taxes on cigarettes and alcohol will also rise from 2024, in part to cover the cost of tackling poverty, but also for health reasons, in order to ease pressure on the Dutch healthcare system.
There will also be changes to the cost of healthcare in 2024. The government expects that healthcare premiums will rise by 12 euros per month next year, therefore rising at an average of 149 euros over the entire year. The exact amount will be calculated by health insurance providers later in 2023.
Other policies on the agenda included the extension of free meals at school for students who need them and extra money in the budget to support children who have problems at home. The government also announced cuts to international development aid and the country’s defence budget for 2024 will also remain below the NATO standard, at 1,95 percent.
Almost as soon as the budget was announced, a number of political opponents and interest groups came out to criticise the plans. Representatives of the BBB, the Farmer–Citizen Movement that came out on top at provincial elections in March 2023, said that while the plans are a “good start”, the government also made "an enormous amount of cuts".
PVV leader Geert Wilders stood by this criticism, stating that the 2 billion euros is simply not enough to tackle the problem. Other parties such as Volt, SP, Denk and the Partij voor de Dieren agreed with the opposition parties, that more money is needed to reduce poverty in the Netherlands.
Oxfam Novib was among the interest groups to come out against the government’s budget and condemned the cutting of international development aid. According to NOS, the organisation stated: "The outgoing cabinet is in direct opposition to the call of the House of Representatives by making significant cuts in the budget for the poorest and most vulnerable worldwide.”
Other interest groups to speak out about the budget shortly after it was announced included the National Student Union (LSVb). "The basic grant will be lower and the rents higher. The outcome of that sum is quite simple: [students] will not make ends meet like this," said chairman Elisa Weehuizen, as reported by NOS.
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