The government’s plans for 2020 as presented on Prince’s Day

Edition 31 October 2019, by Stephen Swai

Relief for middle- and high-income groups

The total burden on citizens will be reduced by 4.4 billion euros in 2020 in order to improve household purchasing power. This is a 2.2 per cent increase in purchasing power for middle-income earners, who earn between 35,000 euros and 52,000 euros gross. Those who earn between 52,000 euros and 75,000 euros will enjoy a 2.4 per cent increase. The lowest income group will make the least progress, with 1.4 per cent.

Companies to pay the price

A large party of the money is expected to be generated by taxing companies more heavily or postponing their tax reductions. For example, the income tax for large companies will fall slightly, but not as much as promised earlier by the government.

The 2019 tax plan had already proposed a substantial, step-by-step reduction in corporation tax. This will be implemented in 2020 and 2021. The income tax for medium-sized and small companies, with profits of up to 200,000 euros, will fall from 19 per cent this year to 16.5 per cent in 2020. For businesses making over 200,000 euros, the tax will remain at 25 per cent, but will go down to 21.7 per cent in 2021.

Money for sustainable agriculture

180 million euros will be made available from 2020 to make pig farming more sustainable. 60 million euros have been reserved for livestock farmers who want to innovate in a sustainable way. The ministry wants to make financial agreements with banks and other financiers for farmers who want to make a transition to circular agriculture.

Homebuyers

The government promises to spend 2 billion euros to deal with the current shortage of around 300,000 homes in the underperforming housing market. It aims to achieve this by developing a fund of 1 billion euros for municipalities to build new homes in areas of big demand. The government is also cutting the landlord tax for housing associations for the next ten years, so that they can invest more easily in building new homes.

Since house prices in the Netherlands are very high, it is difficult for first-time buyers to purchase a house. The government is working on an exemption of the 2 per cent transfer tax for first-time buyers.

Tackling the teacher shortage

The government will provide 13 million euros to tackle the teacher shortage in primary and secondary schools and vocational institutions. The money must be used for increasing the inflow and outflow of teacher training courses. A sum of 21.2 million euros will also be made available for the training and supervision of side entrants.

Basic health insurance premium to increase slightly

It is expected that the average health insurance premium for the basic insurance package in 2020 will be 118 euros per month, 3 euros more than this year.

Savings and investment tax reduced

It is also expected that savings will be taxed at less than today’s interest rates. However, investors will be faced with a considerably higher tax. The government wants to adjust taxation in box 3 by making a distinction between savings and investments.

Trade conflicts and Brexit

The Dutch economy is expected to grow by 1.8 per cent this year and 1.5 per cent next year. However, Minister of Finance Wopke Hoekstra warns that due to international trade conflicts and the approaching Brexit, there is uncertainty about the rate of economic growth.

A No Deal Brexit would cost the Netherlands a little less than 1 per cent of its GDP growth in 2020, according to a rough estimate. If a deep recession will break out in Italy, this would be bad for the Netherlands, given the large exports to this country.

Defence spending

In 2020, the government will spend more than 11 billion euros on defence, 1.35 per cent of the expected gross domestic product. This is below the NATO guideline of 2 per cent. This means that the Netherlands is lagging behind the average spending of the other European countries, currently 1.5 per cent of GDP.

On the other hand, the government will spend more money on the intelligence services. It will give 29 million euros to the Military Intelligence and Security Service (MIVD) and the General Intelligence and Security Service (AIVD). The intention is to conduct more in-depth investigations of organizations, persons and other countries that pose a potential danger to Dutch democratic legal order. 3 million euros will also be available for border surveillance as part of the plan to deal with the British departure from the EU.

Immigration authority to accelerate asylum case processing

The government is planning to spend more on asylum seekers. Next year the immigration authority will be given an additional 134 million euros, with a further 146 million euros in 2021, in order to expedite the application process for asylum seekers by hiring more personnel. However, the funds will decrease in the following years to 100 million euros.