Spring Memorandum: AOW increases along with the minimum wage | Inland

The government has arranged the increase in the state pension in the Spring Memorandum, which was completed on Friday in the Council of Ministers after weeks of consultation. The fact that the old-age benefit falls behind while the minimum wage does go up has haunted the cabinet since the presentation of the coalition agreement. The entire opposition turned against that proposal, which means that the coalition is confronted with a majority of opponents in the Senate.

That is why retirees will receive a bonus in the coming years, the first of which will come in 2023. The cabinet has decided to bring forward the increase in the minimum wage from 2024 to 2023, in order to give minimum wages a small purchasing power boost. The salary will increase by 2.5 percent over the next three years and the state pension will increase at the same pace.

The costs, 2.4 billion euros per year, are largely incurred by the elderly themselves. For example, the AOW Income Support (IOAOW) will be abolished and the intended increase in the elderly person’s tax credit – which was intended to accommodate the elderly after all – will not take place.

The higher state pension is one of the extra expenditures that the government is making despite a considerable number of financial setbacks. De Telegraaf was able to report earlier that Defense will receive billions more in the coming years. As a result, the government will finally meet the NATO standard in 2024 and 2025: spending two percent of the economy on Defence. In addition, almost 3 billion euros is needed to compensate the objectors in the savings tax case.

This additional expenditure is offset by budget cuts. For example, the knife is slowly cutting into its own flesh: the coalition is cutting more than 2 billion euros from the climate, nitrogen and Wopke/Wiebes fund, which is so popular in its own circles. “A relatively modest amount,” says Minister Kaag (Finance), who also hints that citizens themselves should contribute more to greening. “The goals of climate change, that also includes standardization and pricing,” says the D66 minister.

Taxes will also be increased for companies, the wealthy and entrepreneurs. “The strong shoulders will have to carry more burdens,” says Kaag. From next year, companies will pay the high rate (25.8 instead of 15 percent) of the profit tax earlier. That is now only necessary from 395,000 euros, but that limit goes to 2 tons. Entrepreneurs who store their assets in box 2 will also pay more tax on this. The rate there is now 26.9 percent. That will soon be two brackets: 26 percent up to 67,000 euros and 29.5 percent over everything above. Moreover, these entrepreneurs have to pay themselves more wages, on which they have to pay income tax.

The cabinet is also cutting back by eliminating the increase in the exemption from the savings tax. This would be increased – from 50,000 to 80,000 euros – to relieve savers in box 3, but now that the savings tax has been turned upside down by the Supreme Court ruling, the higher exemption no longer has to continue. There will also be a higher transfer tax on ‘non-residential properties’ (such as business premises or a house to rent out). That rate goes from 9 to 10.1 percent. And the tax benefit for expats, who now receive 30 percent tax-free income for 5 years, will be limited to the ‘Balkenende standard’ of 216,000 euros per year.

Nevertheless, the budget deficit this year at 3.4 percent will exceed the European upper limit of 3 percent. The government debt will also increase in the coming years to almost 55 percent of the size of the economy in 2025. That is still well below the Brussels limit of 60 percent.

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