Cabinet outgoing, so ‘light’ Budget Day, but extra money against poverty 05:30 in Politics 2 billion euros will be allocated for purchasing power measures for people with a low or middle income.

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Minister Kaag (now outgoing) with the 2022 Budget Memorandum
Budget Day 2023
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  • Guus Dietvorst

    Politics editor

  • Guus Dietvorst

    Politics editor

Unless a new formation record is set after the elections, today will be the last Budget Day with Mark Rutte as Prime Minister. However, due to the outgoing status of his fourth cabinet, there are no really big plans this year.

A resigned cabinet no longer makes major decisions, as is customary. So the following applies: do not create new policy and only handle current matters. That was not completely successful, because 2 billion euros will be allocated for purchasing power measures for people with a low or middle income.

“A caretaker cabinet requires restraint, but at the same time the future does not wait,” Finance Minister Sigrid Kaag explains the new measures in the leaked foreword to the Budget Memorandum.

This summer, the Central Planning Bureau warned that the number of Dutch people in poverty would rise to 1 million if nothing was done about purchasing power. That scenario is anathema to the vast majority of the House of Representatives and so the cabinet, even though it is in a caretaker state, feels there is room to intervene.

People who are having a hard time

Kaag previously spoke about a budget “with an eye for the people who are having a hard time”. In concrete terms, this means 1.1 billion euros for an increase in the child budget, a contribution to the costs of children that people with lower incomes receive on top of child benefit.

The government is allocating 700 million euros to increasing the housing allowance and 200 million going to increasing the employment tax credit by 115 euros.

The number of people in poverty will not decrease next year as a result of the measures. With 4.8 percent of Dutch people (825,000 people), the percentage remains the same as this year.

Fuel prices

While the government hastily put together the energy ceiling in the run-up to the previous Budget Day, the budget for 2024 does not contain general measures for gas and electricity bills.

After December 31, the energy ceiling will be over and the energy allowance for people with an income around the social minimum will most likely not return. An emergency fund for people who have difficulty with energy costs will remain.

A related purchasing power issue is the upcoming increase in fuel prices. Due to inflation and the expiration of the excise tax discount, a liter of petrol at the pump is likely to become 21 cents more expensive as of January 1.

The government is not doing anything about this in the budget, but it is already clear that the House of Representatives wants to prevent a significant price increase. Tomorrow, at the initiative of the VVD, the subject will be discussed in the debate on the Budget Memorandum.

And how the government’s plans worth 2 billion euros will be paid for? That is well known (and of course also leaked). For example, high income earners are subject to the highest income tax rate faster than anticipated. And so they will pay more taxes. Furthermore, excise duties on alcohol and tobacco will increase.

With the measures (but especially because of the development of collective labor agreements), the purchasing power of an average household will increase by 1.8 percent next year, according to the government. Although there should always be a disclaimer: there are also groups that are worse off.

Matters that do not have to do with purchasing power for lower and middle incomes are not expected to be discussed extensively this Budget Day. Nitrogen, climate, immigration and other major themes will be left to a new cabinet, and therefore to a different prime minister.

  • Budget memorandum: purchasing power increases by 1.8 percent, more money to combat poverty
  • Minister: most minimum wage earners will receive an energy allowance before the end of the year
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