SER proposes sweeping overhaul to replace Dutch allowance system with tax reforms

The Social and Economic Council (SER) has drafted a plan to largely dismantle the Netherlands' allowance scheme, swapping benefits for lower health premiums and higher income-tax rates for middle and high earners.

The SER, a key advisory body to the Dutch government, has prepared a comprehensive recommendation on how the cabinet could largely abolish the existing allowance system. The advice, crafted by a committee that brings together leading employer and employee organisations, senior officials from the ministries of Finance and Social Affairs, and CPB director Pieter Hasekamp, outlines a shift from multiple allowances to a simpler structure.

Under the draft, the health allowance (worth €6.3 billion) would disappear, child benefit and child-related budget (€4.7 billion) would be combined into a single income-independent parental contribution, and the childcare allowance would end in 2029, while a portion of the housing allowance (€5.6 billion) would remain. The loss of benefits would be offset by lower health premiums for everyone and higher income-tax rates for earners above about €50,000, alongside adjustments to tax credits that would keep net burdens roughly stable for higher-income households.

The CPB has already run the numbers, and the Finance Ministry says the final SER advice will be issued later this year, with implementation possible from 2030. Political parties across the spectrum have long voiced a desire to scrap the allowance system, and the proposal revives that agenda ahead of the 2027 budget debate.