New cabinet deal on health insurance, mortgages, child refugees

The pending new Liberal-Labour government plans to scrap payments to help low-income households pay for health insurance from 2014, sources close to the cabinet formation talks said on Friday afternoon.


Health insurance benefit – a maximum of €70 per person – will disappear as part of a shake-up in the way health insurance is paid for. The new coalition plans to introduce an income-dependent element to the fees, removing the need for extra cash.
Scrapping the benefit will raise €4.5bn, all of which will be given back to households in the form of lower taxes. The new coalition plans to cut the 42% tax rate to 38%. Some five million people currently get health insurance benefit.
VVD leader Mark Rutte and Labour’s Diederik Samsom have refused to comment on the leaks.
Mortgage tax relief
Earlier on Friday it emerged the two parties are planning to phase out the tax break on mortgages in phases of 0.5% a year. This means within 28 years the maximum break will have been cut from 52% to 38%, RTL news reported.
The right-wing VVD and Labour party have been in talks on forming a new government since the September 12 general election and are now nearing an end, political pundits agree.
Insiders say the new coalition has agreed to structurally cut spending by €15bn in an effort to get the budget deficit below eurozone limits. The actual volume of cuts will be higher to pay for extra spending.
Finances
The broad agreement has now been sent to the government’s macro-economic forecasting agency CPB which will assess its impact on the state finances.
Once that has happened and policies have been fine-tuned, the coalition agreement can be presented to VVD and PvdA party members. The PvdA will hold a congress to vote on the deal – probably next weekend.
Pundits say November 6 is a likely date for the presentation of the new cabinet.
According to media leaks, this has been agreed so far:

  • Mortgage tax relief will be reduced by 0.5% a year from 2014 for both new and current mortgages
  • The highest tax band will be cut from 52% to 49%
  • The third tax band will go down from 42% to 38%
  • Healthcare benefit will be scrapped
  • Health insurance premiums will become income-dependent
  • €1bn will be cut from the development aid budget
  • The defence ministry will get extra cash for peace missions
  • Student grants will be replaced by loans and the fine for slow students will be scrapped.
  • Tax on insurance will be doubled to 21%
  • Civil servants will no longer be able to refuse to marry gay couples
  • Local councils will have the right to decide whether or not to allow Sunday shopping
  • A limited amnesty for refugee children who have become rooted in the Netherlands
  • Plans to make it easier for companies to sack staff will be reversed
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