Spring Note: Increase AOW Along With Minimum Wage | the interior

Spring Note: Increase AOW Along With Minimum Wage |  the interior

The Cabinet arranged the state pension increase in a spring memorandum, which was completed on Friday in the Cabinet after weeks of consultations. The fact that the old-age benefit is being delayed while the minimum wage has been haunting the Cabinet since the introduction of the coalition agreement. The entire opposition turned against this proposal, which means that the coalition faces the majority of opponents in the Senate.

That is why pensioners will receive a bonus in the coming years, the first of which will come in 2023. The Cabinet decided to introduce the increase in the minimum wage from 2024 to 2023, in order to give the minimum wage a small boost to purchasing power. The salary will increase by 2.5 percent over the next three years and the state pension will increase at the same pace.

The costs, 2.4 billion euros annually, are largely borne by the elderly themselves. For example, the Income Support AOW (IOAOW) will be eliminated and the intended increase in the Seniors Tax Credit – which was intended to eventually accommodate older people – will not occur.

The higher state pension is one of the additional expenditures made by the government despite a large number of financial setbacks. De Telegraaf was able to report earlier that the Ministry of Defense will receive additional billions in the coming years. As a result, the government will finally meet the NATO criteria in 2024 and 2025: spend 2% of the economy on defense. In addition, nearly 3 billion euros are needed to compensate the objectors in the savings tax case.

These additional expenditures are offset by budget cuts. For example, the knife is slowly cutting through its body: the Alliance cuts more than two billion euros from the Climate and Nitrogen Fund and Wopke / Wiebes, which is very popular in its circles. “A relatively modest amount,” says Minister Kag (Finance), who also hints that citizens themselves should contribute more to greening. “Climate change targets, which also include standards and pricing,” says Minister D66.

Taxes will also be increased on corporations, the wealthy and businessmen. “Strong shoulders should take on more of the burden,” Kag says. From next year, companies will pay the higher percentage (25.8 instead of 15 percent) of the dividend tax earlier. This is necessary now only from 395,000 euros, but this limit reaches 2 tons. Entrepreneurs who store their assets in Box 2 will pay more taxes on this. The rate there is now 26.9 percent. This will soon be in parentheses: 26 percent up to 67,000 euros and 29.5 percent on everything above that. Moreover, these entrepreneurs have to pay more wages to themselves, on which they have to pay income tax.

The Cabinet is also reducing the size of the exemption by canceling the increase in the exemption from the savings tax. It will be increased – from €50,000 to €80,000 – to relieve savers in Box 3, but now that the savings tax has been turned upside down by the Supreme Court ruling, the higher exemption no longer has to continue. There will also be a higher transfer tax on “non-residential real estate” (such as commercial buildings or rental homes). This rate goes from 9 to 10.1 percent. Tax benefits for expats, who now receive tax-free income of 30 percent for 5 years, will be limited to the “Balkenende Standard” of €216,000 per year.

However, this year’s budget deficit of 3.4 per cent will exceed the European upper limit of 3 per cent. Government debt will also increase in the coming years to nearly 55 per cent of the size of the economy in 2025. This is still well below Brussels’ limit of 60 per cent.

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