Wider social rate and reduced VAT: Support measures once again extended

Wider social rate and reduced VAT: Support measures once again extended
Belgian Prime Minister Alexander De Croo. Credit: Belga

The Federal Government decided on Saturday to extend household support measures that were set to expire on 30 September until the end of this year.

The government decided to prolong the measures so that "everybody can start this summer feeling at ease" knowing that these various forms of assistance, put in place as a result of the rising energy prices and overall increased cost of living, will be continued until the end of the year.

“We had made a commitment to assess the measures before Summer,” Prime Minister Alexander De Croo stated at a press conference held after the meeting of the core ministers. "The current measures will thus be extended by an additional quarter," he said.

The support measures include a wider social rate — a very low tariff for electricity and natural gas to ensure the energy bill remains affordable for around two million fragile households — as well as the reduced 6% VAT on gas and electricity, and lower excise on fuels.

Also added to the list of beneficiaries of reduced VAT on gas are nursing homes, hospitals, non-profit associations and communes, Finance Minister Vincent Van Peteghem said.

Budgetary means

According to Economic Affairs Minister Pierre-Yves Dermagne, these represent a budgetary effort of over €1.4 billion between now and the end of the year. In addition to this, the fuel and propane gas allowance will be reviewed to be increased from €200 to €225.

The increase in the number of people on the social tariff, of which the government is covering the price, is costing considerably more than anticipated, resulting in questions arising about whether it remained viable to continue with the measure.

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However, Energy Minister Tinne Van der Straeten stressed in May that the social rate is the "most effective measure to protect the most vulnerable against high prices," and proposed to tax the energy producers on excess profits, rather than the suppliers. She will present a draft bill to this end before the summer holidays.

In response to this decision to prolong the measures, Van der Straeten recognised that the measures have a direct impact on the bill, but added that "accelerating the energy transition and insulating our homes are the best measures for structurally reducing the energy bill. The energy you do not use is the cheapest energy."

She said that the government continues to work on making Belgium less energy dependent on other countries.

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