Leaked Dutch 2027 budget reveals 0.1% purchasing power drop despite €1.5B relief package

Purchasing power impact and income measures

The leaked 2027 Dutch budget indicates that average household purchasing power will contract by 0.1% next year. The projection improves upon an earlier forecast of a 0.3% loss, cushioned by a 1.5 billion euro package intended to offset inflation linked to Middle East conflict and domestic policy changes. However, fiscal tables show the net tax relief amounts to 717 million euros, as higher-income earners and pensioners absorb tax adjustments. Minimum-wage earners and low-income households are projected to see a 0.2% gain, while pensioners receive a 0.3% increase. Working households and childless households face a 0.2% decline, and middle-income families see a 0.1% drop. Child poverty is projected to decrease from 2.4% in 2026 to 2.3% in 2027. Income tax rates across the first and second brackets fall by 0.06 percentage points, and the labor tax credit rises by 173 euros for employees, while the threshold for the highest tax rate is frozen at 78,426 euros.

Pensioners0.3%

Low incomes0.2%

Average household-0.1%

Middle incomes-0.1%

High incomes-0.2%

Working households-0.2%

Pensioners

0.3 %

Low incomes

0.2 %

Average household

-0.1 %

Middle incomes

-0.1 %

High incomes

-0.2 %

Working households

-0.2 %

Data from the article text

Tax revisions and abolished exemptions

The government plans to remove several fiscal exemptions previously evaluated as ineffective by the Ministry of Finance. Value-added tax on cut flowers, plants, and hot-air balloon rides will increase from 9% to 21%. Alcohol excise duties will be indexed automatically to inflation, and small beer brewers will lose their reduced excise rate, adding one to two cents per glass compared to large breweries. The tax-free employee discount, which permitted up to a 20% discount capped at 500 euros annually, will be eliminated alongside the work-related costs scheme (WKR). The cabinet will also abolish the tax deduction for starting entrepreneurs, the flexible depreciation rule for new businesses, and the forestry tax exemption. In addition, the government will increase taxes on tap water and gradually reduce fuel excise discounts, while retaining 750 million euros to soften pump prices.

Healthcare and social security adjustments

Several contentious social security reforms have been revised or delayed in the leaked documents. The proposed increase in the statutory healthcare deductible, from 385 euros to 455 euros, is postponed by one year to 2028. The tax deduction for specific healthcare expenses, currently utilized by 900,000 individuals, will end on 1 January 2028, saving 560 million euros annually while providing separate compensation for the chronically ill. The elderly tax credit decreases by 100 euros, though the administration allocated 400 million euros to provide free shingles vaccinations for senior citizens. The government confirmed the cancellation of plans to accelerate the statutory retirement age increase. Plans to shorten the maximum duration of unemployment benefits from two years to one year remain in place but are delayed until 2029, while proposed cuts to invalidity benefits for fully disabled workers remain in the budget.

Minority coalition and parliamentary hurdles

Finance Minister Eelco Heinen titled the 2027 Miljoenennota 'Welvaart opnieuw verdienen', prioritizing business investment and expenditure reform over rising welfare costs. The ruling coalition of D66, VVD, and CDA holds 66 seats in the House of Representatives, leaving it well short of a parliamentary majority. Accompanying the draft budget is a formal letter outlining concessions intended to secure voting pacts with opposition parties ahead of the General Political Debates. Opposition factions have expressed dissatisfaction with the remaining reductions to social programs, including disability insurance adjustments. The government also failed to resolve the Box 3 wealth tax dispute, committing instead to formulate a political solution within six months. Minister Heinen is scheduled to present the briefcase containing the budget to parliament on Prinsjesdag.