More coalition leaks: what do we know about the new cabinet’s plans so far?
The new four-party coalition is set to present its programme for the next four years on Tuesday, but many of the plans have already been leaked. Here’s a round-up of what the papers are reporting so far:
Income tax
- The new coalition will shake up the income tax system by cutting the number of tax bands from four to two from 2019.
- The change will cut the tax bill of someone earning €40,000 by €1,200 a year, but middle and high earners will benefit most. In total, the tax cuts will cost €5bn.
- The new system will involve an income tax rate of 37% on earnings up to €68,000 and 49.5% for all income above that. Currently taxpayers are charged roughly 36.55% on earnings up to €20,000, 40.8% on earnings up to €67,000 and 52% above that.
Mortgages
- The new coalition will reduce the rate at which mortgage holders can deduct interest from tax.
- The deduction will be reduced in four stages of 3%, so that by 2023, home owners will be limited to a 37% deduction. The current rate is 49.5%. The impact of this on people earning over €68,000 a year will be limited by cuts in income tax, the broadcaster said.
- Home owners who still have a mortgage pay an extra tax (eigenwoningforfait) every year based on the official value of their homes. That tax is currently 0.75% but will be reduced to 0.6% to compensate for the reduction in mortgage tax relief.
- According to some reports, this tax will also be gradually extended to people who have already paid off their mortgages.
Asset tax
- The amount paid in asset taxes will be cut by increasing the tax-free limit from €25,000 to €30,000. Assets include savings, shares, art and second homes.
- The parties have also agreed to cut the effective tax rate itself, with is currently around 4%, well above actual returns booked on savings.
Other taxes
- The lower value-added tax rate of 6% will be increased to 9%. The lower rate applies to food, books and entertainment and will add €20 a month to the average family’s grocery and entertainment bill.
- Some form of road pricing will be introduced for road freight traffic.
- Energy taxes will go up.
Employers
- The new cabinet is to cut the basic rates of corporation tax from 25% to 21% while a tax rate of 16% will be levied over the first €200,000 in profits.
- The cuts are to compensate for other changes which will require firms to spend more on sustainability and reaching climate targets, the sources said.
- Employers with up to 25 members of staff will only have to pay one year of sick pay, rather than two, as at present.
- Employers can employ people on temporary contracts for three years rather than two, as at present.
Elected mayors
- The new coalition will pave the way for the introduction of elected mayors but have not yet drawn up plans of how to put this into reality.
- The support of all four coalition parties means there is support of two-thirds of both the upper and lower houses for the change – which is necessary to amend the constitution.
Refugees
- Refugees with residency permits will no longer be able to claim welfare benefits or extra help in paying rent and health insurance for their first two years in the Netherlands.
- Local councils will be responsible for paying for refugees’ housing and health insurance directly, as well as helping them find work and settle into the Netherlands.
- While commercial ‘inburgering’ agencies will remain, the government will impose tougher standards on them.
- The four parties have decided it is ‘too legally complicated’ to make changes to the much criticised amnesty for child refugees, which allows some children considered to be well-rooted in the Netherlands to stay.
- Eight locations for emergency hostels for rejected refugees who can’t or won’t leave will be established.
Education
- An extra €770m will be spent on primary teachers pay and improving working conditions
- There will be more focus on good citizenship in primary schools with lessons about the Dutch national anthem, the Wilhelmus, and compulsory visits to the Rijksmuseum and parliament.
- All 18-year-olds will be given a book about Dutch history.
- University and fees for first year students will be cut by €1,000 to around €1006. The fee will be cut for two years for students at teacher training colleges.
Other measures
- €1.5 bn in extra spending on defence
- €2bn extra for infrastructure, roads, public transport and bike paths
- Paid paternity eave to be extended from two to five days in 2019 and new fathers will also be allowed to take a further five weeks off at 70% of their regular pay from 2020.
- The national climate targets will be incorporated into law and by 2030, CO2 emissions should be cut by 50% compared with 1990.
- Child benefits will go up by a total of €1bn.
- No change to the health insurance own risk payment of €385
- Fines will be increased for repeat and serious traffic offences
- According to the Telegraaf, prisoners will not automatically have their sentences cut by one third for good behaviour. Instead, the maximum reduction will be two years.
- Youngsters will be given priority in government jobs if they have carried out some form of voluntary community work
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