Budget focus on poverty relief is foretaste of election campaign

The all important suitcase. Photo: Rijksoverheid/Valerie Kuypers

This year’s annual budget is likely to be dominated by a word that has already been prominent in the early months of the election campaign: ‘bestaanszekerheid‘, or security of existence.

Pieter Omtzigt made it one of his two main campaigning points when he launched his party, Nieuw Sociaal Contract, in August (the other was administrative reform). Other party leaders, from Frans Timmermans to Geert Wilders, have listed it among their priorities. And it is widely expected to feature in King Willem-Alexander’s speech when he formally opens parliament on Tuesday.

It is a less radical term than redistribution and covers more limited ambitions. Sigrid Kaag’s budget, almost certainly her last as finance minister, includes a number of small tweaks to alleviate poverty and ensure working families have more to spend.

The economic planning agency CPB predicted that the proportion of people living in poverty would grow from 4.6% to 5.7% next year without government intervention.

Energy bill support

Kaag is expected to announce a series of anti-poverty measures worth a total of €2.2bn, including raising housing benefit by €416 a year and increasing child benefits for the poorest families. Support to help the poorest families pay their energy bills will continue next winter, but the universal price cap will end.

The cabinet aims to raise €1.6bn by raising the threshold for the top rate of income tax by 3.5% to €76,000 – below last year’s inflation rate of 9.9%. That means more people will fall into the 49.5% tax band and those earning the highest wages will pay a higher proportion of their taxes at the top rate.

Another €275,000 will be raised from taxes on corporate profits and a further €100,000 from increasing duty on tobacco and alcohol. Taxes on petrol and diesel are also projected to go up by 21 cents and 13 cents a litre respectively.

Spending power

Altogether spending power is projected to rise by 1.8% next year, with working families gaining the most, with a 2.1% increase. Pensioners will have 1% more to spend while people living on benefit will enjoy a 0.7% increase.

Because the government is operating in a caretaker capacity since Mark Rutte submitted his ministerial team’s resignation to the king in July, the budget will contain no major policy announcements.

Some planned reforms have had to be put on hold, including measures to cut tax relief for companies that consume large quantities of gas and electricity.

The so-called “fossil fuel subsidies”, the focus of current protests on the A12 motorway in The Hague, amount to between €36.7 billion and €46.7 billion a year, according to the government’s budget calculations.

Plans to cut €225 million from the budget for elderly care have also been scaled back after they were declared controversial by parliament, which means the government is banned from introducing any new laws until after the election. Around half the measures, including the abolition of a rule requiring two staff to be in attendance for every eight residents in nursing homes, have been shelved.

Koninklijke Schouwburg

The king will deliver his speech in the Koninklijke Schouwburg theatre in The Hague, which has become the temporary venue while the Binnenhof is being renovated.

He will be accompanied for the first time by his second eldest daughter, Princess Alexia, who turned 18 in June, as well as Queen Maxima and the heir to the throne, Princess Amalia.

The royal party will travel from Paleis Noordeinde to the theatre via Kneuterdijk and Lange Voorhout at 1pm, arriving 15 minutes later. After the ceremony the king will travel back to the palace and appear with his family on the balcony.

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