Dutch unions welcome cancellation of VAT increase

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Main trade union federations in the Netherlands say the government’s decision to cancel a planned increase in VAT is logical and sensible.

25 August 2008

THE NETHERLANDS - The Dutch unions have welcomed a government decision to cancel a planned increase in value-added tax (VAT). The two main trade union federations, CNV and FNV, say it is a logical and sensible step to help curb inflation and boost spending power. The cabinet had intended to raise VAT from 19 to 20 percent in 2009.

Prime Minister Jan Peter Balkenende said on Friday that the measure had been cancelled as an "opening move to prevent economic development taking an unnecessary turn for the worse".

The cabinet still hopes it will be able to go ahead with its plan to cancel unemployment insurance contributions. The prime minister said this would only be possible if unions and employers worked together with the cabinet to keep wage increases under control.

Socialist Party leader Agnes Kant said it was inappropriate for the government to call for wage restraint. She pointed to the loss of purchasing power in recent years, increasing corporate profits and the rising wages enjoyed by senior managers and justify unions’ claim for a larger share of national prosperity.

[Radio Netherlands / Expatica]

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