THE HAGUE (MNI) – A majority in Dutch parliament has agreed on
budget cuts that will bring down the budget deficit of the Netherlands
to exactly 3% of GDP in 2013, a surprise breakthrough only three days
after the Dutch government fell on the issue.

Outgoing Dutch Minister of Finance Jan Kees de Jager, who put the
deal together Wednesday and Thursday, complimented the parties involved.
“Parliament has shown a very constructive attitude,” he said.

The current deal is among five parties: the former coalition
partners VVD (liberals) and CDA (Christian-democrats and De Jager’s own
party), and also the smaller parties, D66 (social-liberal), GroenLinks
(Green Party) and ChristenUnie (Christian). PvdA (Labour), the major
opposition party, was excluded from the talks and is not willing to
participate in the deal.

Part of the deal, expected to now approve the measure later,
involves a standstill in wages for public servants for two years, no
more sale of mortgages without the accompanying obligation to pay off
the debt, a faster rise of the pension age to 66 and a rise of the VAT
to 21 per cent.

The retirement age will already be raised by one month next year.
There will a special “crisis tax” for higher incomes. The proposed bank
tax will be doubled to a total of euro 600 million. The tax on alcohol
and tobacco will be raised. Sales tax on houses, that was lowered last
year to 2%, will remain there.

Some of the cuts that were earlier discussed by the coalition of
VVD and CDA have been abandoned. Most prominent is the cut in
development aid. The Netherlands will spend 0,7 per cent of GDP on
international aid. Cuts on nature, education and health were also
abondoned. The total amount of cuts adds up to euro 17 billion, one
billion less than suggested by the former coalition.

Dutch entrepreneurs’ organisations have reacted enthusiastically.
“A courageous step by Dutch politics,” they said in a combined
statement. Labour unions were negative.

Seven weeks of negotiations between VVD, CDA and PVV (Party for
Freedom), that supported the coalition, brought no deal and resulted in
the fall of the Dutch government on Monday. But in two days De Jager got
a deal together with the help of parties on the left that produces
almost the same level of budget cuts.

The Netherlands has until Monday to send its 2013 budget plan to
the European Commission in Brussels.

** MNI – The Hague **

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