This is an overview of the measures related to employment:
Charges on Labour
Taxation on Labour will see a cut of five billion euros. By doing this the ‘wedge’ average will fall by almost 2%. The ‘wedge’ is defined as the difference between labour costs on employers and the net pay to employees. The burden will then be placed mostly on low to middle income earners. Ideally, this will act as motivation for people on benefits to return to work.
The incentive, therefore, to work (more) is increased particularly for those with the lowest incomes. For every extra euro they earn, they will pay less in tax and premiums. This year it is around 28%, and next year it is expected to fall to 23%.
Higher Income Tax
The income tax credit will be increased by 883 euro.
General Taxation and Tax Rates
The general tax credit is rapidly being phased out. The tax rate will be reduced in the second and third tax bands by approximately 2%. The third band, however, will be extended so that the top tariff (52%) comes from a higher salary; the tax band border will move up by nearly 9,000 euro to 66,422 euro.
Combination Discount
The income-related combination tax credit will be increased, resulting in a tax benefit for people with children.
Childcare Supplement
In addition to above, the childcare allowance will be increased as well as the child budget being increased from the second child.
Minimum Wage
Employers will pay less towards the wages of those who earn 120% of the minimum wage. This will cost 500 million euros. The increase in employment as well as the introduction of the so-called Lage-inkomensvoordeel (Low Income Benefit) will soften the effects of the necessary reform of the minimum wage, according to the cabinet. The Low Income Benefit is set to begin in 2017. This autumn the cabinet intends to send a preliminary note on the minimum wage to the Second Chamber.
Elderly Discount
The elderly discount will increase once, by 145 euros. The proposed cuts to the health care and housing benefits have been canceled.
Labour Restrictions
There will be 100 million euro extra for free workspaces for people with an occupational disability. A total of 30,000 'sheltered' workplaces will also be added. The money goes to the municipalities and is intended for the next five years.
Paternal Leave
Paternal leave (after childbirth) is extended from two to five days. All toddlers will be allowed two day sessions at a pre-school. This will cost the treasury 60 million euro.
The R&D Allowance (R&D aftrek) and the Taxation Reduction for Research and Development (WBSO) Merger
In 2016, two fiscal regulations to stimulate innovation within companies, the R&D allowance (R&D aftrek) and the taxation reduction for Research and Development (WBSO) merged into one tax scheme. These difficult to implement premium reductions will be replaced by a system of wage benefits for older employees, and those with occupational disabilities
Source: Rijksoverheid, ANP
By: Alexander Morrison