Tax cut? What tax cut?

Robin PascoeThis year’s budget was a mishmash of political spin and old news, writes DutchNews.nl editor Robin Pascoe.

As is usual every year, most of the main points of the budget had already been leaked or – like changes to student grants – were dressed up and presented as new policy.

And as usual, ministers spoke about exercising caution and produced the traditional range of spending power estimates which always leave everyone wondering how the net impact of the budget will affect them.

Better off?

Most of us, ministers say, will be a little better off next year. We were expecting an income tax cut and we got it. Or did we? The much heralded 0.25 percentage point cut in the basic rate of income tax was cunningly presented as something to benefit us all.

In fact, the tax cut is nothing of the kind. Last year the government cut the bottom tax rate by 0.75 percentage point as a temporary measure. Instead of reversing this in 2015, the basic rate of tax will go up by 0.5 rather than 0.75 percentage point. It is a crafty bit of spin.

Pensioners are already crying foul. They also face the loss of extra tax breaks for retirees and will have to pay more for their healthcare. Four out of 10 pensioners will be worse off next year.

Reforms

This might not be the wisest government move. Ministers have managed to win the support of three opposition parties to make sure their reforms get through the upper house of parliament. But the parties they have failed to commandeer – the Socialists, Geert Wilders’ PVV and 50+ – are likely to make the impact of the budget on pensioners the focus of their attack.

Ministers were right to refer to the potential of the ‘international turmoil’. Events outside the government’s control could easily threaten the ‘fragile recovery’. But you would have thought they would have tried to head off such obvious potential trouble at home.

Even though the Dutch economy would appear to be in calmer waters, there are clear signs of domestic turbulence ahead. Today’s acrimonious parliamentary debate on the budget are a clear sign of that.

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