The government will cut taxes and premiums by €2.5bn in 2009 to maintain purchasing power and counter a downturn in the economy, according to budget details published by the NRC Handelsblad on Saturday.

The budget is under embargo until it is officially presented by the cabinet on Tuesday but the newspaper said it had obtained the documents via normal reporting practices and had an obligation to publish. It had not signed the embargo agreement.
The budget contains few surprises and most of the main points, such as a postponement of the proposed 1% rise in value added tax to 20%, have already been leaked over the past weeks.
According to the NRC Handelsblad, the government will abolish the unemployment insurance premium for workers and lower the premium for employers. In addition, it will introduce a bonus of €3,000 (maximum) a year for people who continue to work after the age of 62.
Moderate wage demands
The Netherlands faces an year of uncertainty in 2009 and the situation requires the cabinet to steer the country well and a ‘sensible attitude’ from employers and unions’, the finance minister Wouter Bos was quoted by the paper as saying.
The government wants employers and unions to moderate wage demands in return for tax cuts. Small start-up companies will be given more tax credits.
The country is in good financial condition despite the international economic turmoil. State debt will decrease to 39.6% of gross domestic product next year, its lowest level since records began in 1814, the paper reports. The budget surplus will expand to 1.2% of gross domestic product, higher than the government had expected.
Inflation above 3%
Welfare recipients and pensioners on a low income will see their spending power fall slightly, while working parents will book a small increase, the paper reports.
According to forecasts by the policy think-tank CPB, on which the government bases its budget, inflation will remain above 3% next year. The economy will grow by 1.25%.
The NRC Handelsblad describes the balancing of the budget a ‘juggling trick’. Extra revenue on natural gas sales and a lower transfer to the EU give the finance minister more room for manoeuvre.
A plan to tax state pensions in phases from 2011 will shore-up government’s finances against the effects of an ageing population, the NRC Handelsblad reports.