Belgium to cut VAT on electricity in response to energy price spike

Belgian Prime Minister Alexander De Croo attends a press conference of the federal government to announce aid measures following an energy price increase in Brussels, Belgium, 1 February 2022. [Pool/EPA/EFE]

Belgium will cut value added tax on electricity as part of a package to shield consumers from rising energy prices, the prime minister said on Tuesday (1 February).

European gas and power prices have spiked this year as economies recover from the impact of the COVID pandemic, contributing to higher bills and inflating the price of many goods.

“It is a difficult situation, the government has shown that it can take balanced measures that respond to realities on the ground,” prime minister Alexander De Croo told a news conference.

With talks dragging until early hours of the night, the government decided on Tuesday to cut value added tax on electricity from 21% to 6% from 1 March until 1 July, to give a €100 cheque to every household, and additional measures for the low-income families.

Speaking to RTBF television on Tuesday, De Croo said it would be unfair for the government to make money from the VAT revenue of rising electricity prices.

Asked if similar measures would apply for gas, he said that the idea was abandoned, because in his words roughly half of the households used gas for heating, and the other half fuel oil. “Europe doesn’t allow us to lift VAT on fuel oil”, he said.

The energy package should amount to €1.1 billion, according to energy minister Tinne Van der Straeten, an average reduction for households of €165.

Most of the European Union’s 27 countries have drawn up measures to cushion consumers from high energy prices. Bulgaria froze regulated heat and power prices until end-March, Spain and France capped energy bill increases, while countries including Sweden have offered compensation to worst-hit households.

Tuesday’s move came after weeks of discussions inside the divided Belgian government over how to support consumers with soaring energy bills.

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