The main reason for the rise is the ending of the temporary VAT reduction on electricity that was introduced by the previous Federal Government. VAT on electricity is now back at 21%, up from 6%. In addition to this those living in the Flemish Region also have to pay the Flemish Energy Levy.
The levy was brought in to pay-off the debts incurred from the so-called “green electricity certificates”. The abolition of the free electricity entitlement has also served to fuel the rise in electricity bills in Flanders.
The Price Observatory’s Peter Van Herreweghe told VRT that the price increase has come despite electricity producers now asking less for their product than they did a year ago. "It is other components such as tax and distribution cost that has meant that the price in Belgium has risen so sharply compared with neighbouring countries.”
The rise in the price of electricity in neighbouring countries averages just 0.7%, compared to almost 40% in Flanders. The increase in the price of electricity helped push inflation up to just under 2% during the second quarter of 2016.