WILLEMSTAD - The sales tax, the OB, is not increased by three but by one percent.

A three percent sales tax increase was previously announced to resolve the budget deficit. The Rhuggenaath cabinet wants to mitigate the impact on the economy this way.

Minister of Finance Kenneth Gijsbertha indicates that the Council of Ministers has decided to implement the measures in a softened form. With a less drastic increase in the sales tax. Namely by 1 percentage point (instead of 2 or even 3 percentage points): for the categories for which now 6 percent applies an increase to 7 percent and for which now 7 percent applies to 8 percent. For the other categories the rate remains 9 percent and for the exemption 0 percent is maintained. Excise duties on beer and spirits will also rise less sharply.

In this alternative scenario, inflation rises 0.4 percentage point compared to baseline. Furthermore, real GDP will shrink by 0.9 percent, a deterioration of 1.3 percentage points compared to the baseline scenario.

Even then there will be a deterioration in purchasing power, a negative effect on investment, zero growth for government consumption, lower imports and exports will fall slightly in real terms as a result of higher inflation.