Tax shortfall of over €8bn drives up budget deficit, says minister

The government will collect over €8bn less in taxes this year than expected, driving the budget deficit up to 3.3%, finance minister Jeroen Dijsselbloem said after Friday’s cabinet meeting.

Lower corporate tax, value-added tax and income tax receipts account for the bulk of the shortfall, but the economic downturn has also impacted on taxes on cars and other duties, Dijsselbloem said.

Spending on unemployment benefit was €500m higher than forecast and the Netherlands will also have to find an extra €500m to help close a deficit in Brussels’ budget.

‘This is in line with the latest CPB estimates,’ Dijsselbloem said. ‘The economic picture has worsened over the past six months and that translates directly into lower income.’


To head off a further overspend, Dijsselbloem said he is freezing ministerial budgets this year and not allocating the traditional compensation for inflation, the Financieele Dagblad said.

Dijsselbloem declined to give other forecasts for next year. They will be made public in September when the government outlines its 2014 spending plans.

However, the news makes it more likely the government will be forced to take extra steps to ensure the budget deficit drops below 3% next year, as required by eurozone rules.

In April, ministers, unions and employers agreed to delay an extra package of austerity measures in the hope of boosting the jobs market. However, ministers said later they would look again at the situation in August, much to the anger of union officials.

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