Cabinet earmarking €2 billion to fight poverty in 2024; €300m budget gap remains
The outgoing Cabinet intends to allocate two billion euros for poverty reduction, according to insider sources who spoke to RTL Nieuws. These plans are expected to be presented during Budget Day on September 19. However, there is still a budget gap of about 300 million euros that needs to be covered, the news website reported.
Despite its fall in July, the Cabinet is still responsible for preparing next year's budget. Financial constraints are tightening due to rising interest rates, which are negatively impacting government finances. This situation led the Cabinet to make its first budget cuts in years in April. Finance Minister Sigrid Kaag warned that the era of unlimited government spending has ended and aims to present a budget that adheres to fiscal rules.
Based on information from insider sources, RTL Nieuws reported on Wednesday that those with the lowest incomes stand to benefit significantly from the Cabinet's plans, potentially gaining more than two percent in purchasing power, notably with the allocation of two billion euros for poverty reduction. "We are really focusing on that group of people who are in danger of falling through the ice," Minister Karien Van Gennip (Social Affairs) said on Wednesday afternoon, de Telegraaf reported.
This news comes in the wake of an announcement by the Central Planning Bureau (CPB) earlier this month that poverty in the Netherlands is expected to rise sharply if the government does not introduce measures to assist struggling households. According to the CPB, purchasing power could decline by as much as 6.8 percent this year without intervention.
However, RTL Nieuws reported that a budget gap of about 300 million euros still needs to be addressed. Options under consideration include increasing the corporate tax, adjusting income tax brackets, implementing cuts across all ministries, or slightly raising taxes for everyone.
It is unclear if car drivers will get any relief from rising gas prices, as the government is considering measures to help. There have been calls recently for the Cabinet to reconsider the excise duty on petrol. Earlier this year, the government reduced these duties as a countermeasure against high energy prices. This reduction has been partially rolled back and will expire on January 1, 2024. Motorists could face an additional cost of 21 cents per liter at the pump. However, taking steps to address this could cost hundreds of millions of euros, funds that are currently unavailable, as reported by RTL Nieuws.