Cabinet tells MPs that tax cuts, minimum wage rise won’t work


MPs’ plans to increase the minimum wage, cut energy taxes and keep the 20 cent per litre tax cut on petrol have again come under fire from the caretaker cabinet, which has described them as vague and poorly supported financially.

MPs voted in favour of the measures during the budget debate earlier this month. In total, the package will require extra funding of €4.2 billion.

But some of the plans will involve spending money the cabinet does not have, while others will not achieve their aim, the cabinet said in 26-page letter to MPs.

Keeping the cost of diesel and petrol down will cost €1.2 bn, money which will only benefit car owners, the cabinet said. And plans to bring in an extra tax on banks to help pay for an increase in the minimum wage will hurt the Netherlands’ competitive position, ministers say.

Ministers have not yet said if they will refuse to carry out the wishes of parliament, but have left the door open for a rethink.

The November 22 general election may also have an impact on the cabinet’s position. The cabinet will act in a caretaker capacity until a new coalition has been put together and that could take months.

At the same time, it is not supposed to take any decisions considered controversial by a majority of MPs.

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