Dutch Ruling Parties Clash Ahead of Senate Elections

The ruling parties are split on income redistribution.

Dutch prime minister Mark Rutte clashed with his Labor Party coalition partner in a televised debate on Thursday when he said the government would not do more to reduce income inequality.

Labor’s Diederik Samsom called instead for a continuation of income redistribution, something Rutte’s liberals have long resisted as a policy.

Income inequality in the Netherlands is among the lowest in the developed world while the top rate of tax is 52 percent.

Although neither leader is up for reelection, provincial elections this month are seen as a referendum on their alliance.

Moreover, provincial deputies indirectly elect senators, meaning the vote could have an impact on the government’s ability to enact legislation.

Rutte was forced into a coalition with Labor in 2012 when the two parties got over 50 percent support together in parliamentary elections. They do not command a majority in the Senate, however, where they formed an informal alliance with the centrist liberal Democrats and two small Christian parties.

The five-party coalition’s razor-thin majority in the upper chamber collapsed in December when three Labor Party members unexpectedly voted down a major health reform bill.

The left-right coalition has altogether been strenuous. Early into his second term, Rutte was forced to roll back planned health insurance and immigration reforms, facing revolts in both ruling parties. Labor later threatened to hold up a housing bill and last month called for deeper cuts in natural gas production than the cabinet had proposed.

To the dismay of right-wing voters, the coalition raised taxes in order to keep the Netherlands’ deficit under the 3 percent European treaty ceiling and cut back on defense. In a typically incoherent quid pro quo, the government also limited short-term work contracts and raised taxes on freelancers (to appease Labor’s trade union allies) while reducing the time the unemployed can stay on benefits (satisfying employers).

With the health reforms blocked in the Senate, the only major legislation still pending is an overhaul of the tax code. But the ruling parties are split on what it should entail and would struggle to get reforms through an upper chamber where their plurality will probably be reduced. The liberals want deeper cuts in welfare to finance tax relief. Labor would rather raise taxes on capital in order to finance income tax reductions.

Polls show the ruling parties losing thirteen out of thirty Senate seats while the liberal Democrats and the far-left Socialists would gain seven and four, respectively. 38 seats are needed for a majority.

Given their low approval ratings, neither Labor nor the liberals have an interest in breaking up the coalition before their mandate expires in 2017.