How full is your wallet in 2019?

Edition 1 February, by Phoebe Potter

As with every new year, many are taking a look at their personal fi nances and wondering what the year ahead might bring. And as with every new year, new rules and regulations are being brought in that will affect your wallet.

In one of the most important changes that will affect every person living in the Netherlands, VAT is going up. More specifi cally, the low VAT rate is rising, from 6 to 9 percent. As a result, daily groceries will become about 2.8 percent more expensive, or an increase on a big shop from €106 to €109. That may seem small, but as the costs will add up – the new rate also applies to things like nights out or a haircut – the average household will pay around €300 more over the course of the year on VAT.

This addition, however, may well be outweighed for many by the fact that for the majority of people income tax will be going down. In 2019 the tax for incomes between €22,142 and €68,507 will decrease from around 40.85 percent to 38.10 percent. Childcare will also be heavily affected by the new regulations. A change in law means that more supervisors must accompany children in daycare, meaning that on average, childcare in daycare centres will go up by around 7%. The government does not want parents to bear the cost of the change in laws, and is therefore counterbalancing the rising costs by allocating €248 million extra to the childcare allowance budget. Roughly calculated, this will balance out to minimally affect the wallets of parents.

Further new regulations have been brought in for the partners of women who have given birth. In the immediate instance, the partner of a mother of a new-born baby will be entitled to five days’ leave on full wages, instead of the two they can take currently. From 2020, employees will be entitled to another fi ve weeks’ leave at any time in the fi rst six months after the birth, receiving 70 percent of their wage. One to watch out for though are energy bills. Because of sustainability goals and an increase in production costs due to higher costs of CO2 allowances, energy bills will go up signifi cantly. This will hit an average family by about €327 a year in extra payments. Encouraging people to be more eco-friendly, landlords who own energy-effi cient homes will be eligible for a tax reduction from 1 January.

The young are doing well under the new rules, as they will profi t from an increase in their minimum wage. Those between under 22 are not entitled to the full minimum wage, but 2019 will see their salaries go up. Twentyyear- olds will be entitled to 80 percent of the adult minimum wage instead of 70 percent, 19-year-olds will get 60 percent instead of 55 percent and 18 yearolds get 50 percent instead of 47.5 percent.

Volunteers are also well-catered for in the new regulations, since they are now able to receive a higher tax-free reimbursement. The allowance is increased to a maximum of €170 per month instead of the previous €150, with a yearly maximum of €1,700 instead of €1,500. Furthermore, people on unemployment benefi ts may now volunteer with organizations and non-profi t organizations that do not have an offi cial charity (ANBI or SBBI) status. This makes it easier for them to work as volunteers on the neighbourhood bus or at a local sports club, without running the risk of having their benefi ts cut.

Health is taken very seriously in the new regulations. Smoking, for one, will become more expensive in 2019. The price of a package of twenty cigarettes will increase by 6 cents as a result of the VAT increase. A packet of loose tobacco become 11 cents more expensive. People who run moderate health risks due to being overweight will receive help from the basic package of health insurance. People will also be able to get transport reimbursed if they have to go to the hospital for a consultation or check-up. Some medicines that can be obtained without a prescription, such as paracetamol, calcium and certain vitamins, will no longer be included in the basic healthcare package. However, a maximum personal contribution of €250 for medicines will be included.

In more unusual economic regulations, reimbursement will be introduced for the loss of income for the relatives of victims. Family members of those who have died or have suffered serious or permanent injuries as a result of someone else’s mistake can receive compensation from 1 January for the suffering they experience. This is because a law comes into effect that regulates the reimbursement of affection damage, a form of grief. This will be applicable to the partner, children or parents of the victim and the amount can range from €12,500 to €20,000, payable by the person liable for the accident or crime.

In a huge change this year, which saw the shutdown of the gas plant in Groningen, the government has committed to its safety in the budget. It is putting at least €1 billion into the future funding of Groningen, and the cost of reducing gas production will be €300 million in 2019, rising to €1.5 billion structurally in 2023.

The government has presented a positive outlook for the economy amongst all these new regulations. A press release states: ‘The Dutch economy and public fi nances are in good shape. All signals are green: this year the economy will grow by 2.6%, the budget surplus will rise to 1.0% next year. Unemployment falls to 3.5% in 2019 and is therefore at the lowest level since 2001.’ It also offers a warning, however, suggesting that it ‘is necessary to build up reserves in bad times for worse times.’ It warns that ‘developments such as Brexit, an imminent trade confl ict and (geo)political tensions in other parts of the world can suddenly reduce economic growth and damage public fi nances.’

The government is currently investing a large part of its healthy fi nancial surplus into public services. Billions of euros will go toward extra policing, better education, more personal attention in the care for the elderly and high-quality infrastructure.