What to Expect from Right-Green Coalition in Netherlands

Tax cuts, higher defense spending and eco-friendly reforms could be part of the next government’s program.

View of Dutch government buildings in The Hague, May 8, 2011
View of Dutch government buildings in The Hague, May 8, 2011 (Roel Wijnants)

The Green party in the Netherlands has agreed to start negotiations to form a government with the center-right.

Coalition talks could take months. The four prospective ruling parties have many differences to bridge.

The Greens want to raise taxes on pollution; Prime Minister Mark Rutte’s liberals want to build more roads. The Greens want to shrink the income gap; the liberals want to cut high taxes and social insurance costs.

The Christian Democrats and liberal Democrats are close in terms of economic policy but miles apart on cultural issues. The former have called for a mandatory national service; the latter want to legalize certain drugs and expand euthanasia rights.

Nevertheless, there may be enough common ground for an accord.

Similarities

The national broadcaster NOS compared the election manifestos of the four parties and found that they all favor comprehensive tax reform, including lower income tax rates.

They all want to invest in security. The Greens would prefer to spend more on developmental aid than defense, but, after decades of cuts and in light of American pressure, higher military spending seems inevitable.

All four parties also want to spend more on elderly care and lower the health insurance deductible.

Compromises

The NOS suggests a number of compromises:

  • Devolve spending and tax authority to local governments. This would allow municipalities to tailor welfare programs to their specific needs.
  • Replace a complex system of health and rental subsidies with tax credits.
  • Lower the capital gains tax from 30 percent and tax actual capital gains as opposed to a fictitious 4 percent.
  • Provide tax relief for startups, eco-friendly companies, electric cars and small-scale energy generation.
  • Shut coal plants only if renewable energy targets cannot be met in a different way. The Netherlands has five remaining coal power plants, three of which are brand new.
  • Incentivize students to volunteer. This would replace the Christian Democrats’ national service proposal.
  • Raise social contributions for employers if they hire workers on a short-term contract in order to incentivize long-term hiring.
  • Reduce burdensome regulations for employers and contractors.

Left- and right-wing voters could probably live with these compromises. Especially when there is no need for further spending cuts.

The last government budgeted €16 billion worth of austerity. This one is projected to have €7- to €10-billion surplus. That should make it easier to find compromises.

Eager

The liberals, liberal Democrats and Christian Democrats are eager to govern. They want to simplify labor laws and the tax code, reforms that were blocked by the Labor Party in Rutte’s outgoing government.

The question is if the Greens — who have never governed nationally — are willing to forego significant changes in income and health policy and take what they can get in terms of environmental policy.

If not, the other three parties could turn to the Christian right for a majority.

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