Cabinet rejects tax cuts to protect budget

14th January 2005, Comments 0 comments

14 January 2005, AMSTERDAM — The Cabinet is not in favour of reducing taxes in coming years if it comes at the expense of reducing the budget deficit, Finance Minister Gerrit Zalm said on Friday.

14 January 2005

AMSTERDAM — The Cabinet is not in favour of reducing taxes in coming years if it comes at the expense of reducing the budget deficit, Finance Minister Gerrit Zalm said on Friday.

Zalm was responding to the traditional New Year's article from the top public servant within the Economic Affairs Ministry. The article suggested that tax cuts would help stimulate the ailing Dutch economy.

But Zalm said the government was already behind schedule in terms of reducing its budget deficit and is unlikely to agree to worsen the situation.

Prime Minister Jan Peter Balkenende also ruled out a tax cut, saying that taxes had already been reduced in 2001. He also said there are indications the economy is starting to recover, partly due to wage moderation.

But the secretary-general of the Economic Affairs Ministry claims that a tax cut will help support the economic recovery and will also be positive for the recovery in the long-term, news service NOS reported.

The Dutch economy slipped into recession last year and the Dutch government has embarked on a massive cost-cutting exercise to boost government finances.

Massive union-led strikes and protests in 2004 won government budget cut concessions in terms of WW unemployment benefits, the WAO worker disability scheme and retirement savings schemes.

But the government will still abolish the tax breaks on early retirement schemes and reached an agreement with trade union confederations FNV, CNV and MHP to moderate wage rises this year.

[Copyright Expatica News 2005]

Subject: Dutch news

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