Finance

You will notice this in your wallet from the Rutte-4 cabinet

The new cabinet plans to implement 3 billion euros in tax cuts for low and middle incomes. So many people should take advantage of that. But how, that is actually still completely unclear.

Taxes and Fees and Income

Households with young children will have a significant windfall in the coming years. Childcare will be virtually free for working parents. Moreover, the childcare allowance, which has caused so much misery, goes in the bulky waste.

The coalition parties also write that they actually want to abolish all allowances, but those plans have not yet been worked out.

Minimum wage up, savings tax gone

People who now work for the minimum wage will have considerably more to spend. The minimum wage will be raised by 7.5 percent to almost 11 euros.

The new cabinet also intends to finally tackle the savings tax so hated by many. People with considerable wealth still pay tax on a fictitious (read: invented) return. Annoying, because with the savings interest at zero or negative, there is often no return at all. You then pay tax on income that you do not have.

From 2025 there must be a system in which the wealth tax is levied on the actual return.

A pity for starters on the housing market with well-to-do dads, moms or other wealthy benefactors around them: the one-off tax exemption for a donation of more than a hundred thousand for the purchase of a house will be abolished.

Pay differently for your car, ever

The cabinet wants a system of road pricing to be introduced from 2030, well after the end of this cabinet term. Virtually nothing is known about the elaboration, except that the costs are not linked to where and when you take the car.

The idea is that you ultimately pay road tax based on the number of kilometers driven. All toll roads will be toll-free again. Incidentally, the coalition also wants to increase the tax-free travel allowance. It is not yet clear how many cents per kilometer it will cost the state about 400 million euros per year. The increase is to come into effect in 2023.

Students compensated for loan system

The student loan system will be abolished again and every student will receive a basic grant again, just like a few years ago. The income-related supplementary grant for students from families with little to spend will also return.

Students who in recent years had to do without a basic grant can choose whether they want a discount on their student debt or a study voucher as compensation.

Easier mortgage with student debt

Also nice for ex-students: if they want to take out a mortgage, they no longer look at the original student debt, but at what is left of it.

Now it is still the case that if you ever had 20,000 euros in debt, and there is still 3000 euros left, the bank is obliged to adjust your maximum mortgage to the monthly charges that are the result of the original debt of 20,000 euros. This is very disadvantageous for former students who pay off neatly for years.

Housing must become more affordable

And there are some more plans to make housing cheaper, especially for starters and people with less to spend. For example, the new cabinet – again nothing is known about the details – wants to lower the social rents for ‘people with a lower income’.

Skewed residents, people with a high salary who continue to live in cheap social housing, can expect a step-by-step increase in rent. However, housing association tenants may have a greater chance of buying their rented house, under (here you have it again) still unknown conditions.

Smoking is very expensive

Anyone who occasionally buys a pack of cigarettes will soon see their money go up in smoke even faster. The cabinet wants to increase the excise duty to 10 euros per package.

The tax on soft drinks will also go up and the cabinet eventually wants to introduce a real sugar tax. There are no details yet. The cabinet wants to reduce the VAT on fruit and vegetables to 0 percent, but the how and when of this is not yet known.

throwing money

All those plans together, of course, cost a lot of money, and there is much more extra spending than cuts elsewhere.

If the money does not come from the citizens, it is therefore borrowed extra. The new cabinet is aiming for a government deficit of almost 2 percent. As a result, there is an additional annual expenditure of about 13 billion euros.

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