Sep 29, 2023 at 4:57 pm
The outgoing cabinet maintains that the additional wishes of the House of Representatives to improve purchasing power next year are not entirely in order. They violate budget rules, the effects are not clear and the financing is inadequate.
Outgoing Minister Sigrid Kaag (Finance) and outgoing State Secretary Marnix van Rij (Tax and Tax Authorities) wrote this in a letter to the House of Representatives on Friday.
Last week, during the General Political Considerations, the debate on the government’s plans for next year, it became clear that the outgoing cabinet does not like the wishes of the House. That was despite a majority in favor of some plans.
These include an increase in the minimum wage, lower fuel prices and an end to more expensive tickets on public transport. In total, the House wants to allocate around 4 billion euros extra.
The House’s plans are difficult to implement or the financing is not in order, the ministers write. There is often also a lack of clear substantiation for whom the measures are intended and what the specific goal is.
Kaag and Van Rij therefore ask the House of Representatives for more and better substantiation of the additional plans. This will be further debated next Wednesday and Thursday during the General Financial Considerations.
Financing fuel discount in violation of budget rules
The ministers advise against extending the discount on fuel prices via excise duties, a proposal from the VVD. The financing is contrary to budget rules.
Simply put, the government may not pay expenses with revenues. For example, it should be examined whether expenditure can be reduced elsewhere in the budget to pay for something. There is no such separation in this proposal.
It is also unclear where exactly the money will come from. At the same time, the costs are quite high at over 1.2 billion euros.
There is a proposal to pay part from the National Growth Fund. This fund was established a few years ago to make the economy more sustainable for the longer term. That plan quickly came under criticism. If only because sustainability and cheaper fuel do not go well together.
The government now adds that government finances will deteriorate if the Growth Fund is used for this purpose.
‘Cabinet opts for measures for vulnerable households’
A reduction (or prevention of an increase) in the petrol price is also a measure for all Dutch people. “While the cabinet has opted for targeted measures specifically for vulnerable households,” the ministers write.
The proposal also called for a reduction in energy taxes. This overlaps with a wish of the CDA to also reduce energy costs. The cabinet therefore wants to know from the parties “whether it is indeed the wish to reduce the energy bill twice.”
Higher minimum wage and child-related budget
Led by GroenLinks/PvdA, the House is asking for an increase in the minimum wage by just under 2 percent. This is especially expensive (1.2 billion euros per year) because benefits such as the AOW, Wajong and Sickness Benefits Act are linked to it. So they also increase.
The banks and shareholders have to pay for this plan with higher taxes.
The ministers think that not enough money has been reserved for this. In addition, they have difficulty rating the banking sector higher. A higher tax has “consequences for the international competitive position of Dutch banks and the business climate”, write Kaag and Van Rij.
Moreover, time is running out if the proposals have to come into effect in 2024. For a higher minimum wage, the law needs to be changed and there is not much time left for that. For some government services, such as the Tax Authorities and the UWV, it must be clear no later than October 15 what the minimum wage will be for next year.
Stop price increases in public transport
The Christian Union got a majority in parliament behind it with the proposal to stop the planned price increases in public transport next year. This applies to both regional transport and the NS. The costs for this amount to 420 million euros per year.
The government also says that the financing method is not in order. In the proposal, costs for 2024 are paid once, while price increases must also be paid in subsequent years.
Moreover, the government is not only concerned with public transport prices. Negotiations between transport companies and, for example, municipalities or provinces have a major influence on prices.
2023-09-29 14:57:42
#Cabinet #doubts #higher #minimum #wage #fuel #prices #Politics
