Higher taxes, earlier pension age increase, in budget plans (update)

An increase in value-added tax and higher healthcare costs are among the measures agreed by a five-party coalition on Thursday to reduce the Dutch budget deficit to 3%.

The minority cabinet plus Liberal democrats (D66), ChristenUnie and GroenLinks agreed the austerity package after two days of talks, following the collapse of the right-wing coalition at the weekend.
The measures include:

  • Increase in the 19% value-added tax rate to 21%, the 6% rate will remain unchanged
  • A cut in income tax to offset some of the effect of the vat increase
  • No tax relief on all but repayment new mortgages
  • Property transfer tax to remain at 2%
  • Those earning €33,000 to €43,000 to pay annual rent increase of inflation plus 1%
  • New banking tax to raise €600m, not €300m
  • End to tax break on home to work travel
  • Pay freeze for teachers, police and civil servants
  • Increase in tax on alcohol and tobacco
  • Higher healthcare fees, reform of own-risk payment to save €1bn
  • State pension age to rise by one month in 2013 and two or three months over the next years
  • Employers to be responsible for six months of unemployment benefit
  • Special crisis tax for very high earners
    The coalition has also agreed a number of measures which the outgoing government is in the process of implementing will be scrapped:

  • Cuts in personal healthcare and special education budgets to be (partially) reversed
  • No more cuts in development aid
  • Planned increases in court fees will be scrapped
  • Value-added tax on solar panels and theatre tickets to be reduced
  • Entire Hedwige polder to be flooded
  • Fees for psychiatric help to be scrapped
  • Welfare benefits will not be based on total household income
    (Source: Volkskrant, Telegraaf, Financieele Dagblad, Nos)

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