October 10, 2017 / 12:03 PM / 9 days ago

In rightward shift, Dutch PM seals new government pact

Dutch Prime Minister Mark Rutte listens during a news conference on the military training ground in Rukla, Lithuania August 11, 2017. REUTERS/Ints Kalnins/Files

THE HAGUE (Reuters) - Dutch Prime Minister Mark Rutte sealed a deal to form a new government on Tuesday, ending months of four-party negotiations and marking a rightward shift along the political spectrum.

The coalition talks were the country’s longest since World War II, overtaking a record of 208 days set in 1977 as the parties struggled to bridge wide differences.

Issues at the head of often fraught debates included migration -- a topic that dominated the national elections in March in which the anti-Islam party of Geert Wilders finished second -- taxes and euthanasia.

Presenting the pact, Rutte said: “It took a long time, but we have an ambitious and balanced plan.”

Rutte, who leads the liberal VVD party, will head his third government since coming to power in 2010.

He is due to start picking his cabinet on Friday, the day after parliament debates the government pact, and have his team installed by the end of this month.

The coalition will have a more rightwing hue than the outgoing government of the VVD and the centre-left Labour party.

The independent budget office said that the government’s plans would increase GDP growth by 0.2 percentage points annually through 2021, with average growth forecast at 2 percent.

But despite being able to reap the benefit of the Netherlands’ strongest economic expansion in a decade, at over 3 percent, the new government may face problems advancing its political agenda as it holds a wafer-thin, one-seat majority in both houses of parliament.

NO MIGRATION CLAMPDOWN

The coalition does not include Wilders’ party and, while a greater focus on national identity is part of its agenda, a clampdown on migration is not.

The four parties -- the VVD, centrist D66 and conservative christian parties CDA and Christian Union -- have agreed to limit financial allowances for asylum seekers in the first two years of their stay.

But the Netherlands also plans to admit several hundred refugees per year more than until now.

Government plans also include a cut in income taxes of around 6 billion euros ($7.1 billion) that will benefit the wealthy and middle classes.

The coalition aims to lower the corporate tax rate, from 25 to 21 percent, but increase tax on polluters and ramp up spending on renewable energy sources. The five coal-fired energy plants in the country will be closed in 2030 at the latest.

Higher taxes on food and other basic supplies and a reduction in mortgage interest deductibility will partly offset losses state income from the tax cuts.

A plan by D66 to extend euthanasia will not get the full support of the coalition as CDA and Christian Union are opposed.

($1 = 0.8490 euros)

Reporting by Bart Meijer; editing by John Stonestreet

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