Dutch Move Closer to New Government After Record Coalition Talks

(Bloomberg) -- Dutch Prime Minister Mark Rutte set out plans for lower corporate taxes and the closure of all coal-fired power plants by 2030 after agreement was reached on forming a new four-party government following the country’s longest coalition negotiations since World War II.

The deal between Rutte’s Liberals, the Christian Democrats, the progressive centrist D66 party and the smaller Christian Union was announced on Tuesday after more than 200 days of talks following March’s inconclusive election. The agreement is “ambitious and balanced,” Rutte told reporters in The Hague, flanked by the leaders of the other coalition members.

The next step will be a debate in the lower house of parliament, which is expected to take place Thursday morning. Chief negotiator Gerrit Zalm, a former Liberal finance minister and also former chief executive officer at ABN Amro Group NV, will then step down, and Rutte will be named as “formateur” with the task of putting together a team of ministers. Once the cabinet is ready, King Willem-Alexander will formally swear in the cabinet, something that could happen in the week of Oct. 23, according to Dutch media.

The new cabinet plans to push through a wide range of measures, including lowering the 25 percent corporate tax rate to 21 percent as of 2021, abolishing the dividend tax, reducing the number of income-tax brackets to two and raising the lowest value-added tax rate to 9 percent from 6 percent.

The four parties also agreed to close all coal-fired power plants by 2030 at the latest. The move is one of a number of measures to lower carbon-dioxide emissions by 49 percent by that year. Rutte’s new government, his third, is also seeking to speed up the reduction of a tax break for homeowners on mortgage interest payments.

National Anthem

And in a perhaps less mainstream measure, the four parties have agreed that all school children in the Netherlands should learn the national anthem, including its historical context. History and Dutch values “are anchors of Dutch identity in times of globalization and insecurity,” the parties said.

Rutte’s party, known as the VVD in Dutch, has 33 lawmakers following the March 15 elections, making it the largest in the 150-seat lower house of parliament, while the CDA and D66 each have 19 and the Christian Union five -- giving the four parties 76 of the 150 seats in the lower house, the smallest possible majority.

While the elections left the political landscape in the Netherlands fragmented, Rutte will retake the helm as prime minister as the Dutch economy has been motoring along nicely -- even without a government. Gross domestic product in the second quarter rose 1.5 percent compared with the three previous months, beating economist estimates.

Since no Dutch party ever wins a majority, coalitions are the norm and forming a government is both a time-consuming and complex process. That was even more the case this time as the March election saw 13 parties winning seats, and Geert Wilders’s anti-Islam Freedom Party added five seats to give it 20, making it the second-largest party.

Most parties refused to consider an alliance with Wilders, triggering the long search for an alternative coalition. The process has so far taken 209 days, with the inauguration of the cabinet, its official end, still some way away. That compares with an average of 72 days since World War II. The previous record stood at 208 days in 1977, the year that Elvis Presley died.

--With assistance from Wout Vergauwen

To contact the reporter on this story: Joost Akkermans in Amsterdam at jakkermans@bloomberg.net.

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net, Eddie Buckle, Richard Bravo