According to De Horde, there are some plans, but it is not yet clear how this should be financed. The Horde is thinking of an intramarginal levy as a tax increase. “There is a European regulation that requires us to levy a tax on electricity generation, so some money may come out of it, but it’s not much.”
Under-exhaustion
We await the definitive proposal which will arrive soon, for now De Horde thinks it will be a matter of ‘scraping here and there’. The Horde thinks policy makers are hoping for “insufficient burnout”: a policy exists, but it cannot be enforced due to lack of personnel or necessary permits. Force majeure and impracticability. “Then you can keep the money in your pocket.” The Horde thinks the money will end up in the national debt.
However, interest payments on public debt are steadily rising and are estimated to cost an extra 5.8 to 9.2 billion euros a year. A huge structural cost item, according to De Horde, even if it always takes a while before something like this really hits Holland. ‘In recent years, they’ve started financing for a long time, just like with a long mortgage. So a high interest rate won’t affect you right away. It is slowly approaching the Netherlands.’
‘The high interest rate was negative when the cabinet took office, now we’ve gone a year and it’s 2.3 or 2.6. If the latter interest is used, it will structurally cost 5.8 billion before having refinanced the entire debt. And this every year.’ According to De Horde, we cannot escape extra taxes or outright cuts. “It won’t work otherwise.”
High marginal rate
Finance Minister Sigrid Kaag has already warned in a D66 congress about the unsustainability of this construction. So reforms really need to be done. The Horde is planning to work longer and work harder. But even though “every economist sees that this will yield a huge sum,” it points to the fiscal climate in which working more doesn’t pay. ‘The marginal tax burden in the Netherlands is very high, it’s not attractive to work an extra day. That’s why everyone in those middle occupations works for such a short period of time.”
Manna
One stroke of luck is that the price ceiling for households will be cheaper than previously thought, because gas prices on the wholesale market have fallen. The ministry now estimates it will cost 11.2 billion, whereas previously it was thought to be more than 20 billion. But that estimate can easily be changed if market prices change. At the August price level, the cap would have cost as much as 40 billion.