Dutch Government to Fund Increased Defence Spending with ‘Freedom Tax’

The newly formed Dutch government, led by Prime Minister Rob Jetten, plans to significantly increase defence spending to meet NATO targets, funded in part by a new surcharge on income and corporate taxes dubbed a “freedom tax.” This move comes amid growing concerns about European security, particularly in light of recent statements from Donald Trump questioning the future of NATO.

Increased Defence Spending Targets

The coalition government aims to raise defence spending to 2.8% of gross domestic product (GDP) by 2030 and further to 3.5% by 2035. This represents a substantial increase from the current level of around 2%. The total increase in defence spending is projected to reach approximately 19 billion euros per year.

The ‘Freedom Tax’

To finance this ambitious plan, the government will implement a surcharge on both income and corporate taxes. This additional revenue, estimated at around 5 billion euros (approximately $6 billion USD) annually, will contribute to the overall increase in defence funding. The funding will too be supplemented by broad budget cuts in other areas, including healthcare, and welfare.

Political Context and Coalition Dynamics

Rob Jetten’s centrist D66 party has formed a minority government in coalition with the conservative Christian Democrats (CDA) and the right-wing VVD. This coalition holds 66 of the 150 seats in the lower house of parliament, requiring it to seek support from opposition parties to pass legislation. Jetten, who became Prime Minister on February 23, 2026, previously served as Minister for Climate and Energy Policy and as First Deputy Prime Minister.

NATO and Transatlantic Security

Dutch Foreign Minister David van Weel emphasized the government’s commitment to NATO as “the cornerstone of our collective security.” This stance is particularly relevant following recent comments and actions by Donald Trump, which have raised questions about the reliability of American protection for European allies. Van Weel acknowledged the damage Trump’s demands regarding Greenland have done to transatlantic trust, expressing hope that such demands will not be repeated.

Balancing Defence with European Autonomy

While reaffirming its commitment to NATO, the Dutch government also recognizes the need for a stronger European Union, both economically and militarily. Van Weel stated the government will focus on “looking at the world as it is and not as it wishes it to be,” suggesting a pragmatic approach to foreign policy and security.

Impact on Other Sectors

The increased defence spending will necessitate budget cuts in other areas, including healthcare and welfare. This has already drawn criticism from opposition parties, who argue for more social and greener policies. The government aims to limit the overall government deficit to around 2% of GDP while implementing these changes.