Rutte: Tax increase is "inevitable;" Higher worker wages can fight inflation

It is "inevitable" that taxes will rise, said Prime Minister Mark Rutte after the Council of Ministers meeting on Friday. His Cabinet is now faced with significant financial setbacks. "I am not going to give the impression that you can only solve these very big problems in [cuts to] spending," he said during a press conference.

He was not yet ready to say whether companies, citizens, or both will be contend with an increased burden. He emphasized that the cabinet still has to implement tax relief for citizens in the middle income groups this summer, estimated at about 3 billion euros.

The government is currently discussing the budget with the coalition parties. There are billions of euros in setbacks. For example, the Tweede Kamer wants more money for Defense and the Eerste Kamer wants the state pension to rise if the minimum wage rises, as the Cabinet intends.

The Cabinet will also discuss the budget with the opposition. This is necessary because the four coalition parties do not have a majority in the Eerste Kamer, the Dutch Senate. The opposition can also tinker with the budget, Rutte said. It must be about more than moving dots and commas, according to the prime minister.

Rutte also calls on employers to raise wages "wherever sensible." Most aspects of the economy are no running well, Rutte said. He thinks it is a case of "being a decent employer" to pay more wages when business is doing so well. Higher wages also help to "cope to some extent with that big wave of inflation."

He still expects the number of bankruptcies to increase because the coronavirus support has stopped. The war in Ukraine will also have consequences for the economy. However, the starting position for the economy is "extremely good," according to Rutte.