September 19, 2018 - Each third Tuesday of September ('Prinsjesdag') the Dutch Government presents its plans and ambitions for the year ahead in the Speech from the Throne, delivered by His Majesty King Willem-Alexander. In addition, the Minister of Finance presents the budget for the upcoming year. We are pleased that we can share a summary with you, prepared by Public Matters.
Prinsjesdag - A Day of Rituals
- On Tuesday September 18, 'Prinsjesdag', King Willem-Alexander officially opened the parliamentary year, presenting the Government's plans and ambitions for the year 2019. In addition, Mr. Wopke Hoekstra, Minister of Finance, presented the related budget.
- The presentation of the budget will be followed by a cycle of parliamentary debates, which will last until the beginning of December.
The King’s Speech - Key Elements:
- The Dutch economy keeps growing, for the sixth consecutive year.
- Most citizens benefit from the economic growth, including middle income households.
- Work: more permanent contracts for employees. Partner leave in event of birth: up from 2 days to 6 weeks.
- Pensions ‘will be stronger.’
- Investment in infrastructure: €2bn.
- Fiscal measures to attract foreign companies and FDI: lower corporation taxes, scrapping of dividend taxes. Measures to prevent ‘mail box companies’.
- Investments in healthcare workers, teachers, police, and military. Defense budget up to €1.5bn (17% increase).
- €3bn to care for the elderly.
- Additional budget for technical education and cybersecurity.
- Address housing problems by building new houses and making better use of existing properties.
- Climate policy: ambitious, with room for innovation. Cleaner energy must be affordable.
- Important international structures are important: NATO, EU, UN, and WTO.
- Focus on external threats to international rule of law, in Europe and beyond. Make use of membership of UN Security Council: modernizing missions, and conflict prevention through aid & trade.
- EU is the closest and best partner; membership empowers the Netherlands in the ever changing global environment. Brexit, and trade wars will make 2019 an intense year, which is another reason to commit to a stronger EU.
- The full transcript of the King’s speech in English can be found via this link.
Budget Proposal – Plans for 2019
- Total government income: €305bn and total expenditure: €295bn.
- Budget surplus to reach 1% of GDP, which is an outstanding result (in international perspective)
- National debt to decrease to below 50% of GDP.
- Economic growth will be 2.6% in 2019, compared with 2.5% in 2018.
- On average, people will have 1.5% more to spend, those in jobs will notice a 1.6% rise, those on benefits 0.9%.
- Unemployment expected to drop to lowest level since 2001: 3.5%.
- Income tax will decrease slightly. [households with incomes up to €68.000 will pay 36.93%, above that the rate is 49.5%.].
- VAT rates on products such as food, drinks and health product rise from 6% to 9%.
- Extra investments include defense (€1,2bn), infrastructure (€0,5bn), education (€1,9bn) and security (€1,0bn).
- ‘Own risk’ for participants in health insurance to remain at €385 a year.
Potential Impact on Business?
- The government is concerned about the long-term sustainability of public finances.
- Higher wages might lead to higher prices.
- Gas revenues down by €300mln per annum, and expected to drop to €1.5bn in 2023.
- Structural EMU balance down to -0.4%. The EU limit is -0.5%.
- International economic threats: Brexit, economic developments in Italy and Turkey, trade wars (US-China).
- Ministry of Security and Justice reserves an extra €50mn in case of a bad Brexit deal; which could cost 1 to 2% of GDP in the long term. An extra €500mn is reserved for an expected rise in EU-contributions, due to Brexit.
- Scrapping the dividend tax by 2020 will cost €0.5bn more than initially expected - 1.9 billion euros annually. To finance this, the government will reduce corporation tax slightly less than previously announced: not from 25 to 21%, but (gradually) to 22.25%. This will yield more than €680mn - enough to pay the increased cost of the dividend measure.
Annex
Agenda - Planned
- September 19 – Budget Day ('Prinsjesdag').
- October 2-4 – Plenary debate about the budget of the Ministry of Finance.
- November 6-8 – Plenary debate about the budget of the Ministry of Economic Affairs and Climate.
- November 13-15 – Plenary debate about the budget of the Ministry of Foreign Affairs.
- November 27-29 – Plenary debate about the budget of the Ministry of Foreign Trade and Development.
- December 4 – Parliament votes on budgets – after which these will be sent to the Senate.
Agenda - Expected
- Debate on the Government's statement and general deliberations – traditionally Parliament debates about the budget proposal in the same week as Budget Day ('Prinsjesdag'), on Wednesdays and Thursdays. However, Prime Minister Rutte is unable to attend next Thursday due to an informal EU summit in Salzburg. Therefore, the debate of Thursday has been postponed to Friday.
- On 2, 3 and 4 October the financial debates (‘Algemene Financiële Beschouwingen’) take place. These debates with the Minister of Finance focus on the proposed budgets. In the following months, all ministers and state secretaries will have to defend the budgets of their ministries in the House of Representatives.
For updates on the budget debates, you can follow Dutch news in English on the website of DutchNews.nl.
