After midnight, the politcal parties who reached an agreement for the formation of the new Dutch government PVV, VVD, NSC, and BBB presented the long-awaited coalition agreement. Key points are a significant reduction in the tax burden and a series of measures to make the Netherlands more attractive for businesses. The coalition is highly committed to economic prosperity and an improved business climate. The agreement promises to put a twist on current economic policy. Details will follow, but the intentions are clear: The Netherlands must become competitive again.
With their outline agreement, the coalition of PVV, VVD, NSC, and BBB aimed at an important goal: stimulating economic growth by lowering taxes and creating a more favorable business establishment climate. The parties are convinced that these measures will position the Netherlands as a leading player in the international economic arena.
Why this is important:
After months of waiting, the time has come. PVV, VVD, NSC, and BBB have come to a coalition agreement. IO highlights the most important points for you.
‘Hope, guts and pride’
The new coalition has indicated a desire to invest first before making cuts. With a planned increase of €7.4 billion in spending and a structural cut of €4.7 billion, the government’s financial contours are set. A maximum government balance of 2.8% of GDP and a public debt below 60% of GDP is targeted.
The coalition is ending the National Growth Fund. In the agreement, the parties talk about “phasing it out.” The first three rounds will still be fulfilled, but the fourth and fifth rounds will be dropped. It also talks about cuts in research funding. “Innovation” is mentioned ten times, of which four times in the agriculture and horticulture section. About Invest NL, the parties say the following: “InvestNL will be strengthened as an important vehicle for investment in innovation and in the potential of our economy.”
Impact of fiscal measures
While the agreement is ambitious, specific details about the impact of these fiscal measures on the economy and society remain unknown. This raises questions about the scope of the positive effects envisioned by the coalition. Transparency in the form of detailed projections or impact analyses would be needed to paint the full picture of the proposed fiscal changes.
Furthermore, the agreement talks about the ambition to simplify and reform the tax system. However, what this reform will mean in concrete terms and within what time frame remains unclear. Clarity about the steps and timing is essential for citizens and businesses to prepare for the upcoming changes adequately.
Fiscal plans and labor market
Fiscal plans include an ambition to reform the tax system, the phasing out of the self-employed deduction, an increase in untaxed travel allowances, and the abolition of the income tax averaging scheme. For the labor market and income, there are plans for raising the minimum wage by 7.5% and a €3 billion tax cut, especially for low- and middle-income earners, working people, and families.
Vision for the future and climate
The coalition’s vision for the future includes a €35 billion climate and transition fund over the next 10 years. In energy and transportation, airline tickets will be taxed more heavily, and investments will be made to make aviation more sustainable. A “Pay by Use” system for all automobility will be introduced starting in 2030.
International position and defense
The coalition is committed to a leading role for the Netherlands within the European Union, with a focus on a decisive, economically strong, green, and secure union. Defense spending will be increased to meet NATO’s 2% standard, and the Netherlands will continue to support Ukraine against Russian aggression.
Timmermans and Jetten’s reactions
D66 leader and outgoing climate and energy minister Rob Jetten is “totally unimpressed” by the agreement. He finds the financial choices of the four parties and their consequences “completely unclear.” Jetten is also skeptical about the climate measures. “More manure and less nature, that will not make building homes easier,” he says. He, therefore, thinks that many promises of the four cannot be fulfilled.
Frans Timmermans, leader of the largest opposition party GL-PvdA, has the biggest objections to the financing of the plans.
“I think it is disastrous for workers and the government. It is built on quicksand. They want to feather directors and shareholders with cuts in healthcare and education. They’re not going to raise the minimum wage, and they’re going to shorten unemployment. I’m not going to say everything is bad they want to do, but when you see how they’re footing the bill, it’s bad for working people.”
