2025 Netherlands budget
| Presented | 17 September 2024 |
|---|---|
| Parliament | States General of the Netherlands |
| Government | Schoof cabinet |
| Finance minister | Eelco Heinen |
| Total revenue | €425.1 billion (proposed) |
| Total expenditures | €457.0 billion (proposed) |
| Debt payment | €8.7 billion (projected) |
| Deficit | €31.9 billion (projected) |
| Debt | €548.4 billion (projected) |
| GDP | €1.176 trillion (projected) |
|
‹ 2024 2026› | |
The 2025 Netherlands budget was presented to the States General on 17 September 2024, a day also known as Prinsjesdag. It was the first budget of the Schoof cabinet and of Minister of Finance Eelco Heinen.
Background and presentation
[edit]A general election was held in November 2023 that resulted in the swearing in of the right-wing Schoof cabinet in July 2024, referred to by the coalition parties as an extra-parliamentary cabinet. It consisted of the Party for Freedom (PVV), the People's Party for Freedom and Democracy (VVD), New Social Contract (NSC), and the Farmer–Citizen Movement (BBB). In their coalition agreement, the parties agreed on the cabinet's policy agenda and on its finances.[1] Several financial setbacks arose afterwards, as the Supreme Court ruled that the manner in which the wealth tax was levied was unfair and as the intended sale of the German division of TenneT, a government-owned transmission system operator, failed.[2]
In August 2024, the Bureau for Economic Policy Analysis (CPB) published its economic projections, concluding that government finances would deteriorate and that the budget deficit would grow. The cabinet met after summer recess to draft its budget.[2] In late August, leaders of the coalition parties met with the cabinet at the Ministry of Finance for two days to discuss the 2025 budget.[1] NSC leader Pieter Omtzigt had threatened to withhold support of NSC for the budget, because the unemployed and pensioners did not sufficiently benefit. This would have led to the fall of the cabinet. In the end, Wilders convinced Omtzigt to agree with the budget.[3] Publicly, the PVV, VVD, NSC, and BBB voiced their support for the budget on 30 August 2024.[4] The budget was approved by the Council of Ministers the next day and sent to the Council of State for advice. Ahead of its official presentation, national media outlets reported on several of the budget's changes compared to the coalition agreement.[5]
King Willem-Alexander read the Speech from the Throne on 17 September 2024, Prinsjesdag, from the Koninklijke Schouwburg in The Hague. This venue was used for the third time, as the Ridderzaal was still under renovation. The speech started with a celebration of the performance of Dutch athletes in that summer's Olympic and Paralympic Games in Paris. The government emphasized its task to tackle issues related to economic security, migration, agriculture, and public financing, while navigating spatial, ecological, financial, and labor constraints.[6] Minister of Finance Eelco Heinen offered his cabinet's Budget Memorandum to the House of Representatives the same day. He stressed the importance of sound public financing and of creating an attractive business environment. Referring to past low interest rates, Heinen declared that the "time of free money is really over," using this shift to justify budget cuts.[7]
Contents
[edit]The 2025 budget, as proposed by the Schoof cabinet, contains €425.1 billion in revenue and €457 billion in expenditures, including €8.7 billion in debt payments.[8] According to CPB projections, this would result in a budget deficit of 2.5% of GDP, complying with the 3% maximum prescribed by the European Union (EU). This norm would be exceeded in 2026 due to a one-time payment related to military pensions. Projections suggested the average household would have a 0.7% increase in purchasing power.[7]
The cabinet proposal included a plan to split the lowest income tax bracket into two, allowing for lower taxation on the lowest portion of income. An increase in the sales tax on hotel stays, sports, culture, books, and newspapers from 9% to 21% would raise the tax's total revenue from €77.7 billion to €82.2 billion.[8] Additionally, the tax deduction for charitable contributions would be eliminated for companies. A significant scaling back of the deduction for individuals, outlined in the coalition agreement, was not included in the budget following criticism from Christian opposition parties.[8][9]
To address a housing shortage, the cabinet set a goal of ensuring 100,000 homes are built each year. €1 billion would be allocated for this purpose, with an additional €500 million earmarked for the development of essential infrastructure. The Ministry of Infrastructure and Water Management would increase subsidies for the Nederlandse Spoorwegen, allowing train ticket prices to rise by 6% instead of 12%. The defense budget was raised to purchase and modernize materiel and to attract additional personnel. Besides, the cabinet planned to spend €95 million on stricter migration measures, such as border control, €162 million on automation and digitization in healthcare, €120 million on tackling organized crime, and an additional €230 million on the police.[8]
Funding for higher education and research would be cut by €1 billion. This would be achieved through lowering the number of international students, increasing tuition for students exceeding the standard duration, reducing money allocated to the Fund for Research and Science, and scrapping research grants. The latter measure replaced a plan from the coalition agreement to terminate 1,200 recently created academic positions.[10] The cabinet restored funding for school meals, which had been scrapped in the coalition agreement, and it allocated €59 million towards compensating primary and secondary schools for the increased sales tax on school books.[8]
Responses
[edit]The four coalition parties – PVV, VVD, NSC, and BBB – had endorsed the budget proposed by the Schoof cabinet before its presentation. Geert Wilders (PVV) said the plans would address the most pressing issues in the Netherlands, but he was critical of funds appropriated to climate change mitigation, which he referred to as "climate madness". According to Dilan Yeşilgöz (VVD), the budget was positive for hard-working citizens, and Caroline van der Plas (BBB) appreciated funding for agricultural innovations.[11] Opposition parties such as the social democratic GroenLinks–PvdA and the Socialist Party criticized the proposed budget for favoring the wealthy, arguing that the projected rise in purchasing power was reduced from 1.1% to 0.7% to finance a compensation scheme for wealth tax payers, following a court ruling.[12] The progressive Democrats 66 party condemned budget cuts in education and culture. The Reformed Political Party welcomed the cabinet's plans to tackle housing and migration issues, calling itself critical yet supportive.[11]
The Council of State advised the cabinet to take labor shortages – such as in education, healthcare, and construction – into consideration when executing plans. It also suggested the issue should be addressed more generally, arguing that the system of taxes and benefits can discourage individuals from accepting additional work. The Council of State welcomed Minister Heinen's ambition to keep down the budget deficit, but it remained skeptical about whether lower EU contributions and savings from a stricter asylum policy would materialize.[13] The Court of Audit agreed with the latter, pointing out that asylum costs have historically exceeded projections. It also regarded the proposed 22% cut in the civil service as lacking sufficient explanation, and it called the cabinet's goals in other policy areas unclear.[14]
During the general financial debate, the coalition parties advocated for the budget, but tensions arose between the VVD and NSC over priorities. The VVD emphasized boosting purchasing power for workers, while NSC argued that supporting benefit recipients is essential to closing societal divides.[15] Several parties complained about past budget projections for being overly pessimistic resulting in needless cuts, prompting Minister of Finance Eelco Heinen to launch an investigation.[16] Additionally, Tjebbe van Oostenbruggen of NSC said that the decoupling of the development aid budget from the size of the Dutch economy had not been agreed to by coalition parties. Heinen responded that additional funds would have to be found to preserve the linkage, which had been in place for decades.[9]
References
[edit]- ^ a b "Kabinet en coalitiepartijen dicht bij akkoord over plannen Prinsjesdag" [Cabinet and coalition parties close to reaching agreement about plans Prinsjesdag]. NOS (in Dutch). 28 August 2024. Retrieved 31 August 2024.
- ^ a b "Coalitiepartijen zijn het na marathonoverleg eens over begroting voor 2025" [Coalition parties in agreement about 2025 budget after lengthy talks]. NU.nl (in Dutch). 30 August 2024. Retrieved 1 September 2024.
- ^ "Kabinet-Schoof was al bijna gevallen, ultieme lijmpoging redde coalitie". NOS (in Dutch).
- ^ "Steun coalitie voor begrotingsplannen kabinet na 'ingewikkeld' nachtelijk overleg" [Coalition support for cabinet's budget plan after 'complicated' discussion at night]. NOS (in Dutch). 30 August 2024. Retrieved 31 August 2024.
- ^ "Gratis schoolmaaltijden blijven, aftrekregeling giften minder versoberd" [Free school meals will stay, charitable contribution deduction less affected]. NOS (in Dutch). 30 August 2024. Retrieved 31 August 2024.
- ^ "Troonrede: 'Uitgangspunt regeringsbeleid moet zijn: wat kan wel?'" [Throne speech: 'Starting point of cabinet's policy should be: 'What is possible?']. NOS (in Dutch). 17 September 2024. Retrieved 22 September 2024.
- ^ a b "Heinen bij aanbieden Miljoenennota: tijd van gratis geld is voorbij" [Heinen offers Budget Memorandum: Time of free money is over]. NOS (in Dutch). 17 September 2024. Retrieved 22 September 2024.
- ^ a b c d e "Dit zijn de plannen en voornemens van het kabinet-Schoof" [These are the plans and promises of the Schoof cabinet]. NOS (in Dutch). 17 September 2024. Retrieved 22 September 2024.
- ^ a b De Haan, Marko (3 October 2024). "Kabinet laat koppeling tussen ontwikkelingssamenwerking en economie los, tot verrassing van coalitiepartner NSC" [Cabinet removes link between development cooperation and economy, surprising coalition partner NSC]. NRC (in Dutch). Retrieved 6 October 2024.
- ^ Kammer, Claudia (23 September 2024). "Het kabinet bezuinigt niet op universitaire banen maar op onderzoeksbeurzen. De schade blijft even groot, zeggen universiteiten" [The cabinet will not cut jobs at universities but will cut funding for research grants. The damage will be as significant, according to universities]. NRC (in Dutch). Retrieved 23 September 2024.
- ^ a b "Reacties uit de Kamer: van 'trots' tot 'feitenvrij'" [Responses from parliament: From 'proud' to 'disregarding facts']. NOS (in Dutch). 17 September 2024. Retrieved 22 September 2024.
- ^ Lammers, Esther (1 October 2024). "GroenLinks-PvdA: Dit kabinet laat werkenden betalen voor vermogenden" [GroenLinks–PvdA: This cabinet lets workers pay for the wealthy]. Trouw (in Dutch). Retrieved 1 October 2024.
- ^ "Raad van State adviseert: bij plannen ook kijken of er wel personeel voor is" [Council of State advice: Check whether enough employees can be found for plans]. NOS (in Dutch). 17 September 2024. Retrieved 22 September 2024.
- ^ De Haan, Marko (24 September 2024). "Rekenkamer: 'Onduidelijk waar dit kabinet voor staat en wat het wil bereiken'" [Court of Audit: 'Unclear what this cabinet believes and what it wants to achieve']. NRC (in Dutch). Retrieved 25 September 2024.
- ^ De Horde, Cor (2 October 2024). "Coalitie geeft geen krimp in debat over begroting" [Coalition does not budge in debate about budget]. Het Financieele Dagblad (in Dutch). Retrieved 3 October 2024.
- ^ De Horde, Cor (3 October 2024). "Kabinet laat onafhankelijk onderzoek doen naar sobere ramingen" [Cabinet orders an independent investigation into pessimistic projections]. Het Financieele Dagblad (in Dutch). Retrieved 6 October 2024.