Economic downturn knocked €11bn off expected treasury income
The economic downturn meant the government collected less tax than expected in 2012, according to the national accounts published on Wednesday.
The shortfall amounted to €11bn, pushing the budget deficit up to 4.1%. This is ‘directly attributable to lower growth figures’, the finance ministry said. The downturn affected all forms of tax, from income tax, corporation taxes, value added tax and the tax on house sales.
The shortfall was partly offset by a €2.6bn bonus in the form of lower government spending.
In total, the government spent €24bn more last year than it generated – the equivalent of €67m a day.
Finance minister Jeroen Dijsselbloem will formally present the accounts to parliament on May 15, signalling a traditional two-day debate on the government finances.
Last week, the European Commission said it is giving Netherlands until 2014 to get its budget deficit under control, a year past the original deadline.
European commissioner Olli Rehn told a news conference the current deficit is due to the nationalisation of financial services group SNS Real and ‘economic conditions which are more serious than expected’.
‘That leads to changes in the recommendations; the deficit should be reduced to under 3% in 2014,’ Rehn said. This means further cuts will be inevitable, commentators said.
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