Broad support for Dutch economic response to pandemic; Concern for many workers
Members of the House of Representatives convened this afternoon to debate with Finance Minister Wopke Hoekstra, pressing government to speed up emergency economic measures in the wake of the Covid-19 outbreak.
The measures in question, which would require significant changes to be made to the government budget, are aimed at aiding small businesses, entrepreneurs and self-employed workers in the Netherlands whose business has been affected by the Covid-19 pandemic.
Minister Hoekstra said that he “well understood” the concerns expressed by the MPs, adding that they will be taken seriously as talks move forward with the government, members of the private sector and EU officials. He also noted that the plan was not a perfect one, and that mistakes will likely surface during its implementation.
The government’s proposed measures include a stimulus package to support the business community by injecting between 10 and 20 billion euros into the economy over the course of the next three months. As a major budgetary issue it has to pass through Parliament. While a majority of the MPs present expressed overall support for the government’s proposal, GroenLinks, the PVV and the SP voiced concern that the stimulus would nevertheless leave many people behind.
“Cleaners, security guards, bus drivers and warehouse workers, these are the people who keep the Netherlands running,” said Mahir Alkaya, speaking for the SP. “And they are far from being acknowledged enough.”
“We already knew before corona that 'business as usual' was unsustainable,” added Lammert van Raan, MP for the PvdD. “It is of course inconceivable that with corona we keep that same type of economy going.”
European spending and assistance
The debate comes a day after Hoekstra expressed his belief that the EU should increase its stimulus spending to cushion the economic blow caused by the Covid-19 outbreak. “My plea is, go on and free up money in the here and now, the current budget, for territories that are especially stricken by coronavirus,” he told RTL Nieuws in an interview on Tuesday. “I’m thinking in particular about the financial-economic side, but also in the new multi-year budget, please think about this kind of crisis scenario.”
However, the Finance Minister added in today’s debate that it nevertheless remains too early to tap into the European Stability Mechanism (ESM)—an organization designed to provide financial assistance to Eurozone countries. This is in spite of other EU countries, such as Germany and Italy, having voiced support for using the ESM to cope with the mounting economic pressure brought about by Covid-19.
Government measures to assist entrepreneurs
The Dutch Cabinet introduced a package of six immediate measures to help businesses of all sizes stay afloat, with assistance for freelancers and contractors. Among them is a scheme to allow businesses to reduce the working hours and the salary of its contracted staff, with the government paying up to 90 percent of the reduction directly to the employee for up to three months. The business would still be responsible for the remaining ten percent.
Two popular programs providing government-backed bank loans and bank credit for small and mid-sized businesses, called GO and BMKB, were also expanded. The amount large businesses can utilize in the scheme was also increased to 150 million euros. The microfinancing program Qredits is also relaxing its payback period, with six-month deferments possible for businesses struggling because of the pandemic. The interest rates on their loans will also be capped for now at two percent.
Similar government-backed loans will also be used to provide working capital to small and midsized farms.
Freelancers and self-employed people can also qualify for the BBZ program, which tops up their monthly salary to a basic wage. Normally a three-month loan, this no longer has to be paid back. However, some non-citizen residents may not qualify for the program.
The tax office is granting deferment of income tax, corporate tax, payroll tax, and value-added tax with no fines for late payment. Companies will have to provide evidence at a later date to demonstrate the deferment was necessary. Overdue taxes will not be subject to interest.
The Dutch government also wants to work with municipalities to reduce local tax burdens that companies face, and to make sure that local arts and culture organizations are still able to survive, particularly because of the national ban on gatherings. Additional coompensation is being determined, in consultation with the European Commission, for sectors badly hit by the pandemic, including cafes, restaurants, and travel.