Despite rosy economic figures, most people will have less to spend next year as the government takes advantage of strong growth to create a buffer against future problems.
While people on minimum incomes and poor pensioners will not be hit, others will see their spending power cut by an average of 0.25%, finance minister Wouter Bos said during the presentation of his budget statement on Tuesday afternoon.
The cabinet has opted to take ‘less pleasurable measures’ to ensure that planned investments in urban renewal and the environment could go ahead while making sure the books balanced, he said.
Labour leader Bos, who was making his first budget statement, also highlighted three measures which he said would tackle the controversy over top people’s pay. These are: limits to pension premium tax breaks for the better off, higher taxes on expensive homes and the introduction of income-related child benefit and non-hospital healthcare.
‘We are repairing the roof while the sun shines,’ prime minister Jan Peter Balkenende said in his comments on the budget. He admitted that the better off will have to pay more, adding that the ‘strongest shoulders will bear the heaviest burden.’ But over the full cabinet period, which runs until 2011, most people will be up to 6% better off, the prime minister said.
The government’s economic policy unit CPB, which publishes its annual calculations on the economy to coincide with the budget, says that the economy is set to grow 2.5% next year, while inflation will reach 2%. Unemployment will fall to 4%, an extraordinarily-low level, the CPB said.
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