New Dutch govt. to change integration policy, increase VAT

The Rutte III government is changing the immigration policy, specifically they're limiting immigrants' access to benefits. The VVD, CDA, D66 and ChristenUnie are also increasing the low VAT rate from 6 percent to 9 percent, RTL Nieuws reports.

Under the new immigration policy, refugees with a residency permit will not be entitled to health benefits, rent allowance and healthcare allowance for the first two years they live in the Netherlands, sources told the Volkskrant. Municipalities will arrange housing, health insurance and guidance in the integration process. This plan is something of a compromise - on the one hand, refugees and other immigrants will get more help in the integration process. On the other hand, access to welfare becomes more difficult.

The increase of the low VAT rate is part of the introduction of the so-called 'social level tax', sources confirmed to RTL Nieuws. The standard VAT rate is 21 percent. The low VAT rate applies to food, water, books and everything that comes from the farm, according to the broadcaster. But the increase in the low VAT rate wil also mean that a visit to the hair dresser, swimming pool, sauna and shoe maker will be more expensive next year.

The new government wants to lower taxes in the coming years, especially for the middle class. This means that the tax system will be reformed. Instead of the current 4 tax brackets, the government wants only two tax brackets, according to the broadcaster. Most tax payers will pay the same tax rate, with only the 10 percent highest earners paying more. This will obviously have consequences for the public finances. Increasing the low VAT rate is one way of compensating for that.

The government formation is as good as done. Over the next few days, the VVD, CDA, D66 and ChristenUnie will be working on the final details of the Rutte III government agreement. The expectation is that the agreement will be presented next week Tuesday.