Budget Day leaks: What we know so far
At 3:00 p.m. on Tuesday the Rutte III government will present its budget for next year. But as every year, a number of the government's plans already leaked to the press. Here follows a summary of what we know so far, compiled by NOS and RTL Nieuws.
Purchasing power will increase next year, especially for people with mid-level incomes or higher. People with an income up to 22 thousand euros will see their purchasing power increase by 1.4 percent. The income group 22 thousand to 35 thousand euros will get plus 1.8 percent, 35 thousand to 52 thousand euros plus 2.2 percent, 52 thousand to 75 thousand euros plus 2.4 percent, and 75 thousand euros or higher plus 2.3 percent. For comparison, purchasing power increased 0.3 percent last year and 0.5 percent the year for that.
Note that these figures are based on averages and estimations by central planning office CPB. The reality may be different per individual.
The basic healthcare insurance premium will be somewhat higher next year. According to the government calculations, the average basic health insurance premium will cost 1,421 euros next year, 37 euros more than the current annual premium of 1,384 euros. That amounts to around 3 euros more per month. This is just the government estimation, used to make policy. The health insurers determine their premium increases themselves and will announce it later this year. The healthcare deductible will remain the same at 385 euros. The government also previously announced that it will push 300 million euros into youth care next year.
The government plans to tackle shortages on the housing market, both for rentals and owner-occupied homes. There will therefore be a subsidy fund for new construction projects for municipalities containing 1 billion euros. And housing corporations can get up to 100 million euros in discounts on the landlord tax, to encourage them to build new homes. To limit rent increases, the share of the real-property value in determining rent will be limited to 33 percent. The government is also thinking about scrapping the property transfer tax for people buying their first home.
Self-employed persons, like freelancers, will receive less tax benefits. The government is going to gradually reduce the self-employed allowance. This year self-employed persons may deduct a maximum of 7,280 euros from their profits so that they pay less tax, that will gradually be lowed to 5 thousand euros. With this measure, the government hopes to discourage flexible work and encourage permanent employment, and thereby reduce the gap between freelancers and employees with a permanent contract.
The government is also expected to provide more clarity about the compulsory disability insurance for self-employed persons. This obligation forms part of the pension agreement concluded this year, but its effects still had to be worked out. Self-employed persons are not happy with this measure, because it means more fixed costs for them, according to RTL.
Multinationals with head offices in the Netherlands, like Shell and Philips will have to pay profit tax in the Netherlands from 2021. Currently these companies can deduct all sorts of costs from their profits, including losses incurred abroad, so that they pay less tax. This resulted in Shell paying no profit tax in the Netherland at all. Last week the government adopted an initiative law from GroenLinks to change this.
Companies can also expect some changes in corporate income tax, which companies pay on their profit. In the Rutte III government agreement, the coalition parties agreed that corporate tax would decrease. But over the summer, Prime Minister Mark Rutte said at a VVD meeting that he would revers the promised tax reduction if employee wages do not rise faster. He seems to be putting deed to word, because the reduction in corporation tax is not going through completely. Small and medium-sized companies that make less than 200 thousand euros in profits will see a decrease in this tax. But for companies that make over 200 thousand euros in profit the tax will remain the same.
Last month sources reported that the government was thinking of creating a large investment fund, involving some 50 billion euros of borrowed money, to boost the Dutch economy if needed. Whether that fund will actually materialize and how much it will contain remain unclear. NRC reports that the plan has been scrapped, and that Minister Eric Wiebes of Economic Affairs will instead present a 'growth agenda' at a later date.
Budget information leaking before Budget Day has become almost as much a tradition as the hat parade. RTL Nieuws noticed that it is mainly 'good news' pieces that leak to the press before hand - such as purchasing power increases and investments to address the housing shortage. Without a doubt, some bad news can be expected when the budget is officially presented on Tuesday afternoon.