Lower electricity VAT will see income losses through delayed indexation

Lower electricity VAT will see income losses through delayed indexation

The Federal Government’s decision to reduce VAT on electricity from 21% to 6% from April to July will help protect households from huge hikes in energy bills but will also cause slow down the indexing of salaries, social benefits and pensions.

The Christian trade union federation, CSC, argues that this will actually have an adverse effect on households since the lowering of energy bills will not compensate for the loss in wages caused by this delayed indexation.

With VAT currently at 21%, social benefits and pensions will be brought in line with inflation in March, while the indexation of public sector salaries will occur in April.

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Had the rate been maintained, the next indexation would have occurred in May for social benefits and pensions, and in June for public sector salaries, according to calculations made by the CSC (Confédération des Syndicats Chrétiens) based on the latest figures on inflation from the National Planning Office, Belga News Agency reports.

However, with VAT on electricity reduced to 6% from April to July, the indexations will be postponed by six months to the end of the year and the lower energy bill will not be enough to offset the resulting income loss, says Thomas Greuse, an economist in the CSC’s research department.


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