The VAT increase agreed earlier this week is going to cost Dutch households an average 15 euros per month next year, according to calculations made by Dutch bank ING at the request of newspaper Het Parool.

In 2014 the average is expected to rise to 25 to 30 euros per month. As part of the budget cuts agreed by the minority caretaker government with the opposition D66, Green Left and Christian Union parties, the high VAT rate will be raised from 19 to 21 percent. The increase is to fill the state coffers with 3.2 billion euros.

 The VAT increase will result in higher prices and higher inflation, while salaries are expected to stagnate, with households set to loose money. ING says its forecast is based on figures published by the Netherlands Bureau for Economic Policy Analysis (CPB).

 (cl/rk)

© Radio Netherlands Worldwide