Freezing Tax Brackets to Cost up to 112 Euros
AMSTERDAM, 14/09/13 - Employees will be 16 to 112 euros worse off next year on account of the cabinet freezing the tax brackets. Only the lowest incomes will remain unaffected, according to calculations based on the measure made by ING’s economic desk.
The cabinet will unveil the budget savings plans for 2014 on Princes Day. Expectations are that it will not allow the tax brackets to rise with inflation. This so-called freezing of the tax brackets is part of the savings package expected to total around 6 billion euros. The measure is intended to raise about 1 billion euros for the Treasury.
Employees with a gross annual income of between 19,000 and 56,000 euros will be 16 euros worse off next year, while incomes above that level will be worse off by much more.
“They will see their disadvantage rise to 112 euros in their tax returns,” says ING economist Marten van Garderen. Only the lowest incomes will not feel the measure in their wallets. Someone with an income up to around 19,000 euros will notice no difference.
This will be the second successive year in which the tax brackets have been frozen. Normally, they do go up with inflation. “If this does not in fact happen, then everyone would eventually land up in the highest bracket,” Van Garderen explains.