Austerity package details leaked, spending power cut by 2%

The five-party agreement aimed at reducing the Dutch budget deficit to below 3% represents extra tax income and spending cuts to the tune of €16bn, the Telegraaf reports on Thursday.

Corrected for the effect of the measures on consumer and industrial confidence, the austerity package will generate €12.2bn for the treasury, according to leaked documents obtained by the paper. The five parties have also agreed €1bn in extra spending.
Although many of the measures were already known, the leak confirms patients will face a €350 ‘own-risk’ charge on their health insurance plus a €7.50 a day fee for hospital stays.
Spending power
The effect of the package on spending power will be around 2% on average, although wealthy pensioners will be harder hit. Families on average incomes will have 1% less to spend.
The government’s macro-economic forecasting agency is currently analysing the plans to assess their effect on the government’s finances and see if they will succeed in cutting the budget deficit to within eurozone limits.
The three minor parties – D66, GroenLinks and ChristenUnie – agreed to work with the minority coalition to draw up austerity measures after Geert Wilders’ PVV pulled out of the talks last month.
The Netherlands is holding a general election in September and a new line-up of MPs will decide how many of the measures agreed by the five-party coalition will actually come into effect.
According to the latest opinion polls, the five parties are not on target to command a majority in parliament.
The main measures at a glance

  • An increase in value-added tax from 19% to 21%
  • First two income tax bands to be cut by 0.4 percentage point
  • Employers to pay an extra 16% tax on salaries over €150,000
  • Tax on tobacco and alcohol to go up
  • Bank tax to be doubled
  • Tax increase on theatre tickets reversed
    Housing market:

  • No tax relief on new interest-only mortgages
  • Help for starters on the housing ladder
    Employment and benefits

  • The state pension age to go up to 66 in 2019 in stages
  • A two-year pay freeze for civil servants and teachers but not hospital staff
  • An end to the tax break on employee travel costs
  • Employers to pay first six months of unemployment benefit
  • Redundancy pay to be maximised at half a year’s salary, procedures to be simplified
  • Redundancy pay to be used for retraining and finding a new job
  • Golden handshakes cash over €531,000 taxed at 75%
  • No help with childcare for households earning over €125,000
  • Household income check for benefits to be scrapped

  • Own-risk fee to go up from €220 to €350 a year, compensation for low incomes
  • An introduction of a €7.50 a day fee for hospital stays
  • Zimmer frames scrapped from basic health insurance package
  • Patients to pay 25% of hearing aid cost
  • Personal assets to have greater role determining residential care and home nursing costs
  • Cuts on personal healthcare budgets, mental health service fees to be reduced
    Other measures:

  • Football clubs to pay part of policing costs
  • Tax break on green investments to remain
  • Local councils and waterboards to bank with treasury, not commercial banks
  • Animal cops scrapped
  • Court fee increases scrapped
  • Extra spending on public transport, nature and education
    Sources: Telegraaf, RTL nieuws

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