The House will debate the Spring Memorandum with the cabinet on Wednesday. Billions are being spent on the current budget because of the war in Ukraine and the screeching inflation of recent months. Support from the opposition is needed to also steer the cabinet’s plans through the Senate. It mainly demands purchasing power repair.
“Purchasing power repair is the most important,” says SP leader Lilian Marijnissen about what she requires from the cabinet on Wednesday. “The cabinet keeps saying that nothing can be done about it this year, while prices are rising. That is really unacceptable. More and more people can no longer pay the bills.”
Marijnissen wants a rent freeze. As of 1 July, housing associations may increase rents by a maximum of 2.3 percent. “That rent freeze was there last year, it’s ridiculous that this is not being arranged now,” she says.
The SP leader has even more ideas for compensating for rising prices. For example, through a further reduction in energy tax, lower excise duties on fuel or a reduction in VAT on groceries. A higher profit tax for multinationals has to pay the price. “We don’t care how purchasing power is improved, as long as it is arranged,” says Marijnissen.
A selection of the government plans in the Spring Memorandum:
- Energy surcharge of 800 euros for vulnerable households
- Reduction of VAT from 21 percent to 9 percent on energy bill as of 1 July
- Reduction of excise duties on petrol, diesel and LPG/LNG since 1 April
- A total of 6.4 billion euros to mitigate rising energy bills
- Defense spending meets NATO standard in 2024 and 2025
- Minimum wage and state pension will increase to 7.5 percent in 2025 from next year
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JA21 wants extra billions from climate funds
Joost Eerdmans of JA21 also sees a solution in tax cuts. He wants to reduce the VAT on petrol to 9 percent and even abolish it completely on groceries. The excise duties on fuel, the energy tax and the tax on gas must also be temporarily set to zero.
“You should leave the financial buffer that people may still have in place so that they do not get into debt. It really starts to squeeze for middle-income people,” says Eerdmans. JA21 wants to pay for this via the billions of funds for the energy transition and nitrogen. “As far as we are concerned, 5 or 6 billion euros can be obtained from that.”
SGP wants tax reduction, GL and PvdA ask for energy surcharge
The SGP is considering a reduction in income tax in the case of additional tax cuts for low and middle incomes. “If necessary, you do this together with an increase in the high rate,” says SGP Member of Parliament Chris Stoffer. “It would be nice if the cabinet moves along with this.”
GroenLinks and PvdA announced last week that they found the amended cabinet plans as stated in the Spring Memorandum too meager. “As a result of rising inflation and energy prices, more and more people are getting into trouble. That needs to be addressed, but this cabinet is failing to do that,” GroenLinks leader Jesse Klaver said.
The parties argue for an extra energy surcharge of 500 euros, an increase in the minimum hourly wage to 14 euros and, like the SP, a rent freeze. PvdA party chairman Attje Kuiken: “More people are having trouble making ends meet and could really use some support in their backs.”
The parties are encouraged in their appeal by an alarming report from the Central Planning Bureau, which warns that up to 1.2 million households will experience payment problems if fuel and energy prices remain high for an extended period of time.
Kaag speaks of a ‘unique combination of extremes’
The coalition of VVD, D66, CDA and ChristenUnie does not have a majority in the Senate, the parties are six seats short of that. Support from JA21, GroenLinks or PvdA would be sufficient. A combination with SP and SGP is also possible.
The Spring Memorandum, which includes all amendments to the current budget, will not be put to the vote as such in the Senate. The adjustments are arranged per department via so-called supplementary or supplementary budgets.
The government started looking for support last month. Almost all twenty political groups were visited by Minister Sigrid Kaag (Finance) and Prime Minister Mark Rutte to find out what the wishes are in the House. “The economic prospects under which this Spring Memorandum has been drawn up are a unique combination of extremes,” Kaag wrote to the House last month when presenting the Spring Memorandum.
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