The Dutch economy is strong, despite economic shocks and global insecurity. What is more, the government is making funds available to support the purchasing power of households. This is the message set out in the Budget Memorandum and the Tax Plan for 2027 which the Minister of Finance, Eelco Heinen, presented to the House of Representatives today.

The government will seek to stimulate economic growth to safeguard the Netherlands’ continued prosperity. It is placing a strong emphasis on three pillars: investment, reform and international cooperation. Issues relating to grid congestion, regulatory pressure and the permitting system must be resolved in order to encourage private investment. Reforms are needed in order to deliver greater productivity and an increase in the labour supply. And international cooperation is crucial so that the Netherlands remains strong at a time when international relations are under great strain.

Minister Heinen: ‘Whether we’re talking about our security, our public services or the opportunities we want to give future generations, they all depend on the strength of the economy. And it’s that economic strength which is under pressure. So our country must recommit to the task of generating economic growth. That means we have to invest, reform, and step up international cooperation. Sound public finances are a prerequisite, and they will be safeguarded by this budget.’

The Netherlands Bureau for Economic Policy Analysis forecasts that, next year, households will on average be 0.1 percentage points worse off, partly as a consequence of the war in the Middle East and higher prices. The government is taking measures that will on average improve households’ purchasing power by 0.2 percentage points relative to earlier estimates. In addition, lower rates of excise duties on petrol and diesel will provide a reduction in the tax burden at the petrol pump totalling €1.4 billion.

In addition, the government will make a one-off investment of €1.5 billion – and invest €300 million on a structural basis – in infrastructure. As a stimulus to home building, €425 million will be invested annually in housing associations, by means of policy measures, to increase their capacity to build more homes. To foster the energy transition, a subsidy of €1.3 billion will be made available for carbon storage with a view to mobilising investment. In addition, some €370 million will be allocated to international cooperation annually over the next three years, partly for Ukraine.

In the government’s view it is important to look carefully at the final design of the tax on the actual return on savings and investments in box 3. It was agreed in the coalition agreement to evolve the new box 3 system, based on actual return, into a capital gains system. Over the coming period the government will therefore present concrete and broadly supported proposals to work towards this objective in line with the coalition agreement. They will be processed at the next budgetary decision-making moment.

Cooperation with parliament, subnational authorities, civil society and business is crucial in order to effectively tackle the major issues confronting Dutch society. With this Budget Memorandum, the government is reaching out to the social partners (representatives of employers’ and employees’ organisations) to come to the table and discuss these issues. The plan to directly link the state pension age to life expectancy has been definitively abandoned. In addition, the measure included in the coalition agreement to lower the maximum daily wage for the calculation of social security benefits by 20% has been scrapped. It has also been decided to postpone a number of proposed social security measures by a year. This offers scope for discussion between the government and social partners about the reforms to the social security system and to conclude a broadly supported social accord.

The government’s commitment to fiscal discipline and a trend-based fiscal policy is undiminished. During the term of this government, the budget deficit will remain below 3% of gross domestic product (GDP) and public debt below 60% of GDP. The deficit will amount to 2.9% in 2027 and fall gradually to 2.2% in 2030. The level of public debt will gradually increase from 45.6% in 2026 to 46.9% in 2027 and 48.9% in 2030. Sound public finances are crucial. Without intervention, expenditure will shift increasingly towards consumption, whereas the government wishes to use the scarce resources to invest in economic growth.

The Tax Plan presents proposals by which the government seeks to address public concerns relating for example to home building. Besides scrapping the limit on interest deduction, the government also aims to address these concerns by abolishing transfer tax for housing associations. Furthermore, the government intends to reduce transfer tax for investors from 8% to 7% from 2027.

In addition, the government wants to amend the measures for the waste processing sector, so that waste incineration plants will have more time to make their operations more sustainable, and to avoid a situation where Dutch waste is incinerated abroad. To this end, waste disposal charges and the CO2levy on industry will rise more slowly than previously planned. Measures are also being proposed that will improve the functioning of the tax system and contribute to sound public finances. Tax reliefs that no longer serve their intended purpose or have become too complex for the people for whom they are intended are being abolished. This also helps implementing agencies. Through these measures the government is ensuring that the tax system will continue to improve in 2027.