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AMSTERDAM — If you are
thinking of retiring early in the Netherlands, you better have deep
pockets. The Cabinet reportedly discussed a plan on Wednesday under which
workers who avail of the VUT system to stop work before retirement age
will have to pay a massive "advance levy" in tax equivalent to a
year's salary. The FNV, the largest labour
union confederation in the Netherlands, described the plan as
"idiotic" and warned it would go to court to "fight tooth
and nail against the violation of pre-pensioners". The extra costs incurred by
workers would have to covered by their employers, the FNV added. Currently, retirees, like
everyone else, pay tax one year at a time. Sources close to the Cabinet
said Ministers discussed a proposal under which a person taking early
retirement would have to pay the tax for each year until 65 in one lump
sum. The measure is intended to make
early retirement "unattractive", but a final decision has yet to
be taken. If it goes ahead, the plan will be outlined on budget day, 16
September and come into force in 2005, the sources said. Employees pay a VUT premium
from their salary, which will provide them with a regular benefit payment
if they retire prior to 65. However, as the population greys, the
opportunities for early retirement are narrowing significantly. The government feels therefore
that the system should be made as financial painful as possible to
discourage workers from availing of it, the sources close to the Cabinet
said. In response, the FNV said the
coalition government was "nagging at older workers" with an
idiotic plan. The workers' group said the taxation on a VUT payment could
come to 30 to 35 percent, and under the government proposal the full sum
to 65 would have to be paid over in a lump sum. Warning that this could amount
to a year's salary, FNV deputy chairwoman Kitty Roozemond said: "I
don't think this is allowed under tthe tax law. You have to pay a massive
amount of tax for money that you have not yet received. That goes against
everything I ever learned about taxation". Meanwhile Central Statistics
Office (CBS) officials indicated on Wednesday that the Dutch economy would
resume its growth in 2004, but at a slower rate than previously
anticipated. They say the economy will grow by 1 percent, rather than the
earlier forecast of 1.25 percent, according to Radio Netherlands. Unemployment is expected to
increase to 540,000, while a budget deficit of 2.4 percent would remain
within EU-approved levels. Copyright
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