'A necessary reform': Belgian energy taxes to increase from April

'A necessary reform': Belgian energy taxes to increase from April
A shell tanker loaded with diesel, Friday 09 October 2009. Credit: Christophe Legasse / Belga

Belgian Finance Minister Vincent Van Peteghem (CD&V) has issued a long-awaited proposal for reforming Belgium's electricity and gas tax regime which, if approved, will see Belgians pay up to €20 a month more for energy bills from 1 April.

The proposal, which was officially announced on Tuesday, includes an indefinite extension of the current 6% VAT rate on electricity and gas as well as a complicated mechanism for levying excise taxes on Belgians' energy consumption.

According to estimates by De Tijd and other news outlets, the scheme is expected to cost the average Belgian family almost €20 a month from its planned implementation on 1 April, or an extra €180 over the course of 2023.

At a press conference, Van Peteghem said that he will attempt to "convince" his government colleagues of the benefits of his proposal, which he described as "a necessary, structural reform, which makes it possible to anchor the reduced VAT rate equal to 6% and to better protect the basic consumption of households."

The plan will be discussed by the cabinet of Prime Minister Alexander De Croo (Open VLD) in the coming days and is expected to be put to a vote in the Federal Parliament within the next few weeks.

The hand that gives and takes away

Although Van Peteghem's own CD&V party has already endorsed his proposal, other groups in the so-called "Vivaldi" coalition government (PS, Vooruit, Groen, Ecolo, MR, and Open VLD) have yet to formally announce their support. Outside the government, the plan has been vehemently condemned by parties across the political spectrum.

"At the moment that energy prices are finally starting to drop a bit (but are still unaffordable for many), Vivaldi is going to make our energy bill more expensive again," tweeted Hedebouw Raoul, the President of the left-wing Belgian Workers' Party (PTB-PVDA). "In what world does this government live?"

Right-wing Flemish nationalist party Vlaams Belang similarly condemned the plan: "What we have warned about since the government's declaration in October 2022 is confirmed today," the party stated on its official Twitter channel. "The VAT reduction that the government has given with one hand will be partly taken back in excise duties with the other hand."

Balancing the budget

Numerous reports allege that Van Peteghem felt compelled to introduce the additional levies in order to help balance Belgium's budget, which is currently the highest in the EU.

As energy prices exploded following Russia's invasion of Ukraine in February 2022, the Federal Government "temporarily" cut the VAT rate on electricity and gas from 21% to 6%. It is estimated that this tax regime would have cost the Belgian State up to €1.3 billion had it remained unamended throughout 2023.

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However, the new excise duties are expected to see the Belgian Federal Government spend €761 million in energy relief for Belgian households in 2023 – roughly €550 million less than it would otherwise have paid.

But if the reforms are not agreed in time, the pre-invasion VAT regime of 21% will be automatically re-applied from 1 April. This could potentially see Belgian households pay up to €57 more per month in energy bills.

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