Low income? The new Dutch cabinet will not be kind to your wallet

Rob Jetten has already won voters’ confidence. Now comes the harder part: convincing them his cabinet’s policies won’t hurt their wallets.

The Netherlands officially gets a new government today, as Rob Jetten is sworn in as prime minister alongside his D66, VVD, and CDA cabinet at Huis ten Bosch Palace in The Hague.

While the ceremony takes place, the Netherlands Bureau for Economic Policy Analysis (CPB) has released its verdict on what the new coalition’s plans actually mean for your finances.

Without any new government measures, the spending power of the average household in the Netherlands would have grown by 0.6% during the cabinet’s term.

However, according to AD, the new plans of Jetten’s cabinet drag that figure down to just 0.2%.

Those with lower incomes will hurt the most

The impact of the new policies appears to be unevenly distributed.

The people with the least to spare are bearing the brunt. Households earning up to around €32,000 a year will see no improvement in their purchasing power whatsoever, according to the CPB.

The only stakeholders that gain anything are those at the top. The CPB finds that people earning upwards of €115,000 will see the biggest improvement in what their money can buy.

Even then, their purchasing power increase amounts to just 0.3%.

What causes this?

There are a number of reasons for this.

Firstly, the coalition plans to raise the eigen risico — the annual health insurance deductible, or the amount you pay out-of-pocket before your insurer covers the rest.

The lowest eigen risico will jump from €385 now to €460 in 2027, rising further to a whopping €520 by 2030. Earning minimum wage? You’re probably more reluctant to go check out that backache now.

The higher deductible does come with a slightly lower monthly insurance premium — but the zorgtoeslag (the healthcare allowance lower-income residents rely on to keep premiums affordable) is expected to shrink with it.

The government will also increase tax rates and introduce what it calls a “freedom contribution.”

This is an extra levy on top of regular taxes, essentially meaning households will contribute more to national security spending when they pay their income tax.

Starting in 2028, the Friedrich Naumann Foundation estimates that the security levy will get the government an extra €3.4 billion from residents and a cool €1.7 billion from businesses.

All to meet their budget for the defence sector without gathering too much national debt. Somebody has to pay for the two officers going to save Greenland, and all indications point to you.

Lots of bad news for workers

The CPB’s long-term projections get even grimmer.

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Unemployment is expected to rise to over 453,000 people in the coming years, and the number of people living in poverty is set to increase during the cabinet’s term.

Those who end up on welfare will face the worst impact of all. The coalition plans to cut both the amount paid out and the duration of benefits to unemployed and disabled groups.

Meanwhile, on the pensions front, anyone with decades of working life ahead should be warned. From 2033, the government intends to accelerate the rise of the AOW (state pension) age to 70 and a half.

READ MORE | Working until you’re 72? The new Dutch coalition wants to up the retirement age

This means someone retiring in 2060 would need to work an extra 15 months compared to what current rules would require.

Civil servants aren’t off the hook either. The new policy plans to cut their salaries while piling on more responsibilities, which the CPB warns is a recipe for problems.

The opposition is not happy

GroenLinks-PvdA, the largest opposition party, has said it will withhold support unless the plans are substantially reworked.

Translation: Anyone who wants to help the Netherlands move forward will make different political choices than this cabinet.

Party leader Jesse Klaver argued that ordinary households face hundreds of euros in extra costs while the country’s wealthiest residents are being asked for nothing extra.

The Christian Union, PVV, JA21, and SGP have raised objections too.

Jetten faces his first parliamentary debate next week, and it won’t be easy. With just 66 seats in a 150-seat parliament, the cabinet will have to fight tooth and nail for every single vote.

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