Tax news

Tax changes 2003

Tax budget 2003

by Radio Netherlands, wereldomroep, 17 September 2002

The new Dutch coalition government has followed through with its promise of a harsh remedy to the nation's economic slump, delivering a budget that slashes government spending by 3.5 billion euro.


The budget, released on Tuesday with the opening of Parliament, cuts back on disability payments, defence spending, and workers' saving schemes, among other areas.

Prime Minister Jan Peter Balkenende warned the situation would get worse before it would get better.


"The financial situation in the Netherlands at the moment is really bad. We lost our good position as far as exports are concerned. We had a budget surplus but now we have a budget deficit again, we are talking about the greying of the Dutch population; that means we need new strategies. I think the government needs to be honest, and take its responsibility, and make clear to the Dutch population that we have to change things."


Aid Remains

Despite fears the government – an uneasy coalition of Christian Democrats, liberals, and the right-wing Pim Fortuyn Party - would be inward looking, Dutch foreign aid has not suffered in the budget, remaining at .8 per cent of GNP. Mr Balkenende:


"Even though we are experiencing difficult times, we will continue with expenditure as far as development cooperation [foreign aid] is concerned. If you talk about our responsibility for peace missions and so on, we'll be there."


Immigrant integration spending within the Netherlands, however, has been cut, as has military expenditure. An 816 million euro saving on Dutch defence spending is slightly offset by a 130 million commitment to European military developments such as the planned rapid intervention force.


No Miracle

Finance Minister Hans Hoogervorst sounds an even grimmer note than Mr Balkenende in justification of the budget cuts.


"The international economy is obviously doing poorly, and we are doing even worse. The competitive advantage we had in the past 15 years – because of a prolonged period of wage moderation, the so-called ‘Dutch miracle' – we have lost that advantage."


Mr Hoogervorst says despite a stalled economy, wages are continuing to increase at four per cent.


"I expect and hope that in the near future, the wage rises will decrease. It's absolutely necessary because we have lost about 10 per cent of our competitive advantage over our neighbours in Europe."

Not So Disabled

Unemployment is predicted to rise from three per cent of the workforce, to five per cent – 400,000 people – within two years. Mr Hoogervorst singles out the Netherland's million-strong group of disabled workers as an economic drain the country can no longer afford. The group includes those suffering psychological as well as physical illnesses.


"We are going to do something about that. We are going to make the entrance examination for the disability scheme much tougher, and obviously we have to do something about unemployment as well."


Dutch trade unions reacted angrily to the budget, claiming that the government´s plan to dismantle the popular tax-free wage saving scheme while at the same time clamping down on pay increases was grossly unfair.



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