Ministers meet for tricky pre-budget talks

The cabinet will meet on Wednesday afternoon to start what look like being difficult discussions on next year’s budget following the summer recess.

The most important discussion point will be consumer spending power. Yesterday the government’s planning office CPB warned almost all households will have 1% less to spend next year. In June spending power was still expected to grow by 0.25% in 2009.
Meanwhile inflation will rise to 3.8%, a 0.3 percentage point higher than earlier estimates.
Finance minister Wouter Bos will therefore want to postpone the proposed increase in value added tax (btw) to 20% for a year, reports ANP news service on Wednesday morning.
However, this means the cabinet’s promised reduction in unemployment benefit (WW) premiums will have to be put on hold – something the Christian Democrats (CDA) are against, says ANP. The CDA is the largest party in the government coalition.
Meanwhile, calls to scrap the plans to increase btw are growing. On Wednesday morning the employers’ organisation VNO-NCW said that the latest CPB figures ‘strengthens its conviction’ that btw should not be increased.
The organisation also want the unemployment benefit premium for workers to be scrapped and substantially reduced for employers, reports the Financieele Dagblad.
Trade unions are also against the rise in btw and last week central bank chairman Nout Wellink added his voice to the growing demand for the move to be scrapped.
The government’s annual budget will be announced on September 16.
On Wednesday morning ministers involved with social economic policy will get together to prepare for the afternoon session.

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