The Dutch government’s plan to trim tax deductions for pension contributions ran into obstacles after the opposition-controlled Senate demanded amendments to the bill, a move that risks derailing 2.9 billion euros ($3.9 billion) in austerity measures.
“The plans presented this way are unwise therefore we would like the cabinet to consider withdrawing the plans,” Wopke Hoekstra, a senator for the Christian Democrats, the largest opposition party in the upper house, said in The Hague today.
The passing of the pension bill was a first test for Prime Minister Mark Rutte’s cabinet in the Senate, the Dutch parliament’s upper house. The law is part of a 16 billion-euro austerity package the coalition agreed to in November last year when Rutte’s second cabinet took office. Of this amount, 3.5 billion euros was penciled in for next year. In addition, the cabinet plans extra cost cuts and tax increases of as much as 6 billion euros for 2014.
The Democrats D66 and the Christian Union also criticized the bill, while with Geert Wilders’ Freedom Party and the Socialist Party have already said they are against it. Deputy Finance Minister Frans Weekers asked the Senate to adjourn the session and hold on to the bill for now.
“We don’t expect it to fail,” Finance Minister Jeroen Dijsselbloem said on RTLZ television earlier today commenting on the opposition’s position. “We will defend the proposal, we will see how far we get.” He also said “there are possibilities to reach out to” the Senate.
The bill, presented by Weekers and Deputy Minister of Social Affairs Jetta Klijnsma, passed the lower house in June. The law limits the amount of pension premiums that are deductible from income tax as part of a plan to gradually increase the retirement age. Opposition parties claim these plans limit the possibility for younger people to save for their pensions.
“The cabinet is cashing in on a firm limitation of the tax deductibility of pension premiums and younger people will be the victims,” said Peter Ester, a senator for the Christian Union.
Dijsselbloem and Deputy Prime Minister Lodewijk Asscher are in talks with the opposition to get backing for the additional 6 billion euros in cost cuts and rate increases in order to get support in the Senate at a later stage. Attempts to come to an agreement have failed so far.
The popularity of Rutte’s cabinet has dropped since it was installed last year. If elections were held now, Labor and the Liberal party would retain only 29 seats in the 150-member lower house, a drop of 50 seats, according to a poll by Peil.nl, published Oct. 6. Labor would fall to 11 seats, while Rutte’s Liberal Party would get 18 seats, according to the poll, based on at least 2,500 interviews.