Rutte promises to address purchasing power, wealth inequality, but won’t say how
The Cabinet does not intend to let go of the controversial 500 million euros cuts to youth care or the decoupling of the state pension and minimum wage. Prime Minister Mark Rutte said this during the debate on his statement on behalf of the coalition, and the Cabinet's plans on Wednesday. He acknowledged that, in due course, the declining purchasing power of the elderly and the availability of youth care for vulnerable children would have to be examined further, as will issues related to wealth inequality.
The Cabinet was heavily attacked by the opposition on both these themes on Tuesday. The coalition parties are also concerned about the purchasing power charts that the Central Planning Bureau (CPB) and Nibud published. These show that many groups will see their purchasing power decrease and the elderly the most. The cutbacks in youth care will also hurt many. On this point, they are supported by the municipalities, who say that they can not provide good care as things stand now. As long as the cuts remain in place, they do not want to talk to the Cabinet about how they can improve youth care, newspaper Trouw wrote last week.
Rutte acknowledged that the broad decline in purchasing power is a setback for which the Cabinet must find a solution. The agreement was that all groups should improve on average. "Although, of course, you can't guarantee that for every individual." But the high inflation, caused by the increased energy bill and more expensive groceries, dashed that promise.
The "political reality" also forces the Cabinet to accommodate the opposition, Rutte acknowledged. The coalition parties VVD, D66, CDA, and ChristenUnie, have a small majority in parliament but need support from other parties to pass legislation in the Senate. GroenLinks, the PvdA, and Ja21, in particular, play an important role in this because they can help the coalition get a majority.
Rutte said he first wants more clarity from the Central Planning Bureau about inflation projections. Energy bills are rising sharply and grocery bills have also become more expensive. But according to Rutte, it is still too early to predict whether inflation will remain very high throughout the year. The CPB will release a new estimate this spring, which the Cabinet will use to determine its options. He warned that the possibilities to offer solace in 2022 are "very limited."
Minimum wage, pension decoupling, and wealth inequality issues play heavily in debate
By raising the minimum wage, the coalition parties want to ensure that people at the bottom of the labor market have better opportunities. The increase in social assistance also helps to raise the subsistence level. But also raising the state pension would cost billions and benefit people with a good supplementary pension. That is why the government wants to make a one-off exception to prevent pension payments from rising.
The state pension has automatically increased in line with the minimum wage since the 1980s. The entire opposition wants it to remain this way. A motion to continue the practice was signed by the PvdA, GroenLinks, JA21, PvdD, Volt, BIJ1, BBB, SGP, and MP Liane den Haan. The SP and PVV have already introduced similar motions. The coalition government needs one or more of these parties to be able to claim majority support in the Senate.
Rutte also said that he is waiting for various ministries to complete investigations into ways to reduce wealth inequality in the Netherlands. They will publish a report on this before the summer. Only then will the Cabinet react, he said.GroenLinks leader Jesse Klaver asked the prime minister what the new Cabinet intends to do to tackle inequality. Though the Cabinet is trying to address income differences between demographic groups, several political parties believe the difference in accumulated assets by different groups is a growing problem, like the rising disparity between homeowners and tenants.
Rutte also admitted that wealth inequality "has become more relevant in recent years." But taxing wealth more heavily is not a goal in itself, he emphasized.
His reaction was met with indignation from Klaver, DENK leader Farid Azarkan, PvdA leader Lilianne Ploumen, and SP member Lilian Marijnissen. Klaver even accused the prime minister of playing Liar's Poker. "All parties said they would increase the taxes on capital in their election programs. And the compromise is that there is 100 million tax relief in the coalition agreement," concluded the GroenLinks leader. Ploumen also wanted to know how the topic was handled during Cabinet formation talks.
Klaver indicated that enough reports have already been written about taxing wealth. He handed the reports to the prime minister during the debate. The GroenLinks leader found it hard to believe that Rutte "in 2022 does not yet have an opinion about wealth inequality," which, Klaver said is "the biggest driver of inequality in the Netherlands".
Rutte indicated that he finds it "genuinely interesting" to "see how the advisers say how we should look at this from a policy perspective," but he did not want to anticipate the official advice, Rutte insists.
Gert-Jan Segers, leader of the coalition party ChristenUnie, indicated that his party does have "political openness" to shift taxes on work to taxes on wealth. "We're going to talk about that calmly," said Segers.
Reporting by ANP.