Dutch Cabinet will not deliver promised €4.5 billion in tax relief next year

The Cabinet is not expected to find the 4.5 billion euros in tax relief measures it promised to the public when the four coalition parties, PVV, VVD, NSC and BBB agreed to form a government. The tax reductions will miss the mark by a "substantial amount," a source close to budget negotiations told RTL Nieuws. Further, instead of increasing social benefits by the anticipated 2.1 percent, the increase will only be about 1 percent.

The news outlet also quoted another source as saying tax breaks will be "a little less" than the parties pledged. There "will be tax relief for everyone next year," that source told the broadcaster.

The first Cabinet of Prime Minister Dick Schoof will instead attempt to pull the reins on the budget deficit. In their coalition agreement, the four parties were criticized for stacking up promises within their first two years in office, and kicking the can down the road when it comes to paying for those plans.

Last month, the Bureau for Economic Policy Analysis (CPB) presented its preliminary Macro Economic Outlook for 2025. In its report, the policy advisory office said it expected the Dutch economy to grow by 0.6 percent this year and 1.6 percent next year. At the same time, purchasing power should improve by an average 2.5 percent this year, and 1.1 percent in 2025. This will take it above the point prior to Russia's intensified invasion of Ukraine, and the high levels of inflation which followed.

"We cannot spend the money that the Netherlands has gotten accustomed to in the last few years, but everybody knows this," Schoof said a few days later. He expressed concern that the deficit held close to the 3 percent limit from the European Union.

Because of the CPB report, the Cabinet wants to scale down its measures to improve household position, RTL Nieuws reported.

The decision to reduce tax relief and benefits for Dutch households may have also been a cause of the contentious atmosphere during last week's marathon budget negotiations. Sources told the Telegraaf that NSC leader Pieter Omtzigt was overcome by emotion several times, and frequently walked out on talks. This had the effect of dragging out budget talks hour-after-hour.

"That was, let me put it this way, an uncomfortable exercise in extra-parliamentary relations," Omtzigt said on Monday. He said it is difficult to balance both his role as a party leader in Parliament with the Cabinet's needs for more assurances.

"That takes some getting used to. There need not be any ambiguity about my commitment. I stand up for people who are in trouble because their situation affects me and I am not made of Teflon. The Hague will have to get used to that."

Omtzigt was at odds on numerous occassions with former Prime Minister Mark Rutte, who was once nicknamed "Teflon Mark."