Higher taxes, no free childcare to pay for coalition plans

More income from traffic fines, higher income tax, and a further delay to free childcare plans are among the measures the government hopes will fund a raft of new initiatives announced in the spring financial statement.

While the first results of the negotiations were made public on Wednesday morning, it was not until Friday afternoon that the four-party coalition released the full financial implications of the plans.

Earlier, it emerged that the right-wing coalition plans to cut unemployment benefit from two years to 18 months, increase employer contributions for disability benefits, and reduce the planned cut in income tax.

Money is also being shaved off individual ministry budgets.

The government aims to generate an extra €2.5 billion a year by raising the tax on assets. Currently, people pay tax on savings and other assets over €57,684, but that threshold is being lowered to €51,396. At the same time, the rate of tax payable will increase by 1.78 percentage points.

The fictive return on other assets will also rise. From 2026, rental income and benefits from personal use will be included in the calculation, the finance ministry said, without giving further details.

The tax on soft drinks will be expanded to include dairy products, which have so far been exempt. The health ministry’s drugs budget is also being cut by €70 million a year.

The education sector has reacted angrily to news that a special scheme to help disadvantaged children at secondary school is being scrapped. “I am really furious,” Thijs Roovers, from the Aob teaching union told the NRC.

As previously announced, the cabinet plans to freeze social housing rents for two years, a move that has angered housing corporations, which say it will hamper efforts to build new homes. Housing benefit will also rise slightly.

However, the €1.1 billion extra for defence, announced by VVD leader Dilan Yesilgöz, turns out to be spread over several years: €200 million next year, €300 million in 2027, and rising to €1.2 billion by 2030.

The cut in energy tax – which will benefit the average household by €20 a year – will only apply for three years. Meanwhile, spending on asylum will rise by €3.5 billion, largely to cover increased accommodation costs.

A further €3 billion has also been allocated to local authorities, largely to pay for improvements to youth care services.

3% budget deficit

The measures put the budget deficit just within the EU’s maximum of 3% of GDP next year. However, this means that if there is a recession or other setback, the government will be forced to make further spending cuts.

Finance minister Eelco Heinen said the package of measures is both “solid and well-balanced” and does not involve deferring payments. “I stand for healthy and sound public finances,” he said.

“This approach helped us greatly during previous shocks, such as the coronavirus pandemic and the energy crisis. Now too, at a time of international uncertainty, financial buffers are crucial.”

Discussions on major issues such as nitrogen-based pollution and climate change have been postponed until the autumn budget talks.