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Dutch budget pact will cut spending power 0.25%

October 5, 2012 Dutch News
The autumn spending pact agreed between prime minister Mark Rutte and Labour leader Diederik Samsom will lead to a 0.25% reduction in spending power next year, finance minister Jan Kees de Jager said on Thursday.

Spending power will be hit by plans to double the tax on insurance to 21%, De Jager said in a briefing to MPs.

The two party leaders agreed to increase the tax to compensate for the decision to scrap a planned tax on travel expenses and higher fees for slow students.

Budget deficit

The changes announced by Rutte and Samsom will not affect the budget deficit, which is still forecast to be 2.7% next year, the finance minister said.

However, De Jager said he would have made other choices and said he regrets the fact that the insurance tax is to be increased.

Labour and the Liberals are currently in talks on forming a new government following last month's general election. De Jager, a member of the Christian Democrats will carry on as finance minister until a new alliance has been agreed.
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