Cabinet wants to reduce the VAT on energy (natural gas, electricity and district heating) from 1 July 2022 for six months from 21% to 9%

Package of measures to mitigate the consequences of rising energy prices and persistent inflation

The government is once again taking additional measures to help people with low and middle incomes cope with rising energy prices and ongoing inflation. Inflation could rise sharply to 5.2% this year, mainly due to higher energy prices. Purchasing power is expected to fall by an average of 2.7%. That is why the cabinet is increasing the one-off energy allowance to 800 euros for people with an income around the social assistance level. The VAT on energy will also be reduced from 21% to 9% and the excise duty on petrol and diesel will be reduced by 21%. Finally, the government has put forward 150 million euros that was earmarked for 2026 to help low-income households take energy-saving measures. Ministers Van Gennip (Social Affairs and Employment), Kaag (Finance), Schouten (Poverty Policy,

The purchasing power of the Dutch has been under pressure for some time due to rising energy prices and persistent inflation. The terrible war in Ukraine is now on top of that. Millions of people have to leave home and hearth in search of a safe haven. This situation also has economic consequences. Although much is still uncertain, it is clear that Dutch households are declining in their disposable income. The CPB notes that people with low incomes are particularly at risk due to rising prices. That is why the cabinet feels the need to take additional measures this year.

Increase in one-off energy allowance for low incomes

At the end of 2021, the previous government announced that it would invest 3.2 billion euros in a reduction of the energy tax. A one-off energy surcharge of approximately 200 euros per household was also announced to mitigate the consequences for people with incomes around the social assistance level. This also applies to the elderly with low incomes. This one-off arrangement is now being increased to 800 euros per household. The government and municipalities aim to pay the allowance to households as soon as possible.  

Reduction of VAT on energy and excise duty on petrol and diesel

The cabinet wants to reduce the VAT on energy (natural gas, electricity and district heating) from 1 July this year for six months from 21% to 9%. As a result of this measure, the energy bill (for a household with an average consumption) will fall by approximately 140 euros in this six months. In addition, the government proposes to reduce the excise duty on petrol and diesel by 21% from 1 April 2022 until the end of the year. That means a reduction of 17.3 cents per liter for petrol and 11.1 cents per liter for diesel.

More money for energy-saving measures for households

At the end of last year, the previous cabinet decided to release 150 million euros to help households make their homes more sustainable. 150 million euros will now be added to this to take extra energy-saving measures. A budget will also be made available for a supporting campaign to make people more aware of the options for energy-saving measures.

Caribbean Netherlands

In order to dampen the effect of rising energy prices in the Caribbean Netherlands, 5 million euros will be made available. The details of this will be worked out as soon as possible.

Cost recovery

The temporary package of measures has consequences for the budget. This extra package involves a total of 2.8 billion euros. The government attaches great importance to ensuring that the measures are properly covered. This coverage is important so that the bill is not passed on to future generations. Among other things, the cabinet uses the extra gas revenues to pay for the package. The government also uses remaining funds from the Brexit Adjustment Reserve (BAR). A maximum of 364 million euros is available from this.

Source Rijksoverheid.nl