There will be no further tax cuts in the Netherlands in 2007 on top of the 1.2 billion euros (1.54 billion U.S. dollars) already promised, despite the booming economy, Financiele Dagblad newspaper reported Thursday.

"The reductions of the tax burden for citizens and companies have been determined. There will be no more," Dutch Finance Minister Gerrit Zalm was quoted as saying after a cabinet meeting on Wednesday.

The Dutch economy is growing faster than expected, which means that the government will have extra money to spend.

But Zalm feels that this money should be used instead to improve the budget balance, said Financiele Dagblad.

Ministers will be discussing the 2007 budget during this week and the next.

Last spring, the government decided to earmark 1.2 billion euros for reductions in the tax burden in 2007. It will use this money to reduce the unemployment insurance premiums, increase the contribution to child care and children's allowance and reduce tax on profit for businesses.

At the time Zalm and Prime Minister Jan Peter Balkenende also made it clear that this was the maximum sum to be earmarked.

Calculations by the Bureau for Economic Policy Analysis (CPB) that leaked on Friday showed that the Dutch economy is growing faster than was forecast a few months ago.

The CPB has therefore adjusted its estimates for economic growth and now forecasts a 3.25 percent growth this year and 3 percent in 2007. In both cases this is a quarter of a percentage point higher than estimated in the initial forecasts. The CPB also expects to see the budget deficit shift toward a slight surplus next year.

Zalm is nonetheless planning to keep a hand on the purse strings for fear of being blamed again for lowering the tax burden when the economy is booming, as happened under his responsibility in Wim Kok's second government, said Financiele Dagblad.

Source: Xinhua