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Federal government wants to use extra VAT revenues to lower energy bills

The federal government is looking at how the extra VAT revenues from rising energy prices can benefit families. ‘If people become poorer, the government cannot keep the profits to itself,’ says Minister Frank Vandenbroucke (Vooruit).

Vooruit chairman Conner Rousseau does not care how the government does it. As long as households’ energy bills go down, he says. According to the Vooruit CEO, the government can finance measures with the additional income from VAT on energy. According to him, due to the rising prices, the government will collect 350 million euros extra VAT. If it depends on Rousseau, this should serve to reduce the energy bill.

Minister of Finance Vincent Van Peteghem (CD&V) thinks it is ‘only logical and correct’ to return the additional income from VAT to the families, he says. Deputy Prime Minister Frank Vandenbroucke also wants the money to flow back to the people. “I’m not going to comment on how you do it.”

Headaches

From rising energy prices cause political headaches. Energy products are already 19 percent more expensive than a year ago, which means inflation is almost 3 percent. Several small energy suppliers in our country have temporarily stopped shutting down contracts with a fixed energy price. Some suppliers are trying to protect their cash position by increasing the monthly advances.

Van Peteghem expects major price increases at the beginning of January, when households consume the most. By then there must therefore be a solution for the high energy bill. He points to the reform of the energy levy to excise duties – by the way an obligation of Europe – with which the government wants to exercise more control over that part of the invoice.

Energiecheque

Federal Economy Minister Pierre-Yves Dermagne (PS) pleaded Thursday for an energy check of 100 euros for each family. That measure would cost 500 million euros. Dermagne wants to pay for this with surplus profits from the sector and additional income from VAT and excise duties. The proposal will be on the table during budget discussions.

Federal Energy Minister Tinne Van der Straeten (Green) and her Economy colleague Pierre-Yves Dermagne (PS) are calling for an extension of the social rate for energy until next year. This measure affects approximately 20 percent of households. The VAT on energy-saving renovations has also been lowered before.

100

energy check

Federal Minister of Economy Pierre-Yves Dermagne (PS) wants to give each family a one-time energy check of 100 euros.

The Van der Straeten cabinet has asked the energy regulator CREG to investigate the additional profits of the operators of the nuclear reactors, but also of the distributors and suppliers of energy. In this way it can be checked whether the government can skim off part of this.

A reduction in VAT, as previously proposed by Zuhal Demir (N-VA), can count on little enthusiasm within the federal government. The measure would be too expensive and also affects households that are less severely affected. Rousseau is not explicitly against it.

French-style blokkering

There may not be a blockage in energy prices like in France. CD&V Minister of the Interior Annelies Verlinden rejected the measure on Friday in De Morgen. “France is not Belgium, we cannot necessarily use the mechanism that is used there in Belgium,” she responded. ‘Energy prices are included in the index, which gives people more purchasing power when energy prices rise. We must not lose that mechanism.’

French Prime Minister Jean Castex announced on Thursday evening that gas prices will be locked. On Friday, the gas price rose one last time by 12.7 percent. After that, the rate may not increase until April.

The French government is also reducing the tax on electricity, so that the price increase of electricity in February 2022 should be limited to 4 percent. Without government intervention, the price would increase by an estimated 12 percent. The French government wants to pay for the measures through the additional tax revenues associated with the increase in the gas price.

The French government previously allocated 580 million euros to help the poorest households pay their energy bills. 5.8 million families receive a one-time energy check of 100 euros. The government is willing to do more if necessary, Castex said.

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