Thanks to the government’s measures against poverty, the lowest income group will still improve in purchasing power next year. This is what the Central Planning Bureau expects in the macroeconomic forecast for Budget Day. In August, the CPB expected that the purchasing power of the lowest incomes would decline without new policy and poverty would increase.
To support these lower income groups, the government is increasing, among other things, the housing allowance and the child budget. The purchasing power of higher incomes is actually improving less than the August estimate, because the support for lower incomes is partly paid for by having higher incomes pay slightly more taxes.
As a result of the measures, the CPB expects that the increase in purchasing power for the average household will be slightly lower than estimated in August: an increase of 1.8 percent instead of 1.9 percent.
View the purchasing power expectations for different income groups here. And swipe to see those of even more types of households.
The energy surcharge of 1,300 euros for people with a lower income will disappear next year. And as a result, the purchasing power of this group was in danger of declining.
But the government is now fixing that with other income measures. One of the most important of these is the rent allowance, which is increasing. The maximum rental allowance next year will be 416 euros higher than this year. And the child budget will be increased: for the first child the maximum amount increases by 750 euros per year and for the second child by 883 euros.
This will prevent a threatening increase in poverty among children. The CPB now expects a decrease in the percentage of children in poverty from 6.2 percent this year to 5.1 percent next year. Without measures that would be 7 percent.
High tax bracket earlier
The measures are partly paid for by the government allowing the second tax bracket to start earlier. From a gross income of 75,625 euros you will pay 49.5% tax. That would originally only be at 80,263 euros.
All in all, most groups are improving in purchasing power. However, according to calculations by the Ministry of Social Affairs, there are also people whose purchasing power will decrease slightly next year. For example, the purchasing power of single people with only a state pension falls by 0.3 percent.
And that of a single person on the social minimum without children decreases by 0.4 percent. Because without children you will of course not benefit from the higher child-related budget.
Nibud: disappearing energy surcharge is a loss
Budget institute Nibud is concerned about the disappearance of the energy surcharge and calls it a loss for the lowest incomes. According to Nibud’s own calculations, a single person on social assistance will lose out by 4.3 percent, which amounts to 72 euros per month.
“A single person on social assistance was able to get by with all the temporary measures and without setbacks this year,” says director Arjan Vliegenthart. “But if you can spend 72 euros less next year, you will fall short every month.”
Nibud has calculated for more than 100 model families how many euros they will receive additional or less. Most groups are also making progress in this expectation.
The CPB has also estimated how the economy will progress. The economy shrank in the first half of this year, but the CPB expects that there will still be growth in 2023 as a whole and next year as well.
Due to the purchasing power measures, poverty remains stable; it previously threatened to increase in 2024. Unemployment will rise slightly next year, but is still very low in a historical perspective.
- Cabinet in the Budget Memorandum: measures to combat poverty
- Cabinet outgoing, so ‘light’ Budget Day, with extra money against poverty
- King in Speech from the Throne: continue working on equality of opportunity and social security