PM warns of impact lowering VAT on energy would have on public finances

The Federal Prime Minister Alexander De Croo (Flemish liberal) has said that while he recognises that the Federal Government needs to take urgent action in ensure that energy bills remain affordable, he warns of the impact any measures might have on the public finances. Speaking in the Chamber of Representatives on Thursday, Mr De Croo said that he is in favour of temporary measures that would be directed at assisting those in genuine need of help to be able to afford to pay for gas and electricity.

In other words, Mr De Croo is not in favour of a general reduction in the rate of VAT on energy from 21% to 6% as proposed by the Federal Finance Minister Vincent Van Peterghem (Flemish Christian democrat) on Wednesday. 

With many of us already having seen the amount we pay every month as an advance on our annual energy bills shoot up recently, the rising price of paying for heat and light in our homes was the subject of much debate in the Federal Parliament on Thursday.

During question time the Flemish nationalist MP Ben Wollarts said that "The cries for help from those that are receiving the bills are echoing around the chamber”.

On Wednesday the Federal Finance Minister Vincent Van Peterghem said that he will be proposing a reduction in the rate of VAT (currently 21%) on gas and electricity. This proposal was applauded by MPs from his own Flemish Christian democrat party, the Flemish socialists and the opposition parties PVDA (far-left) and Vlaams Belang (far-right).

However, not all parties in the multi-party federal coalition are in favour of a reduction in the level of VAT levied on energy. The Flemish liberal Christian Leysen and the Francophone liberal Florence Reuter we both keen to stress that any measures taken would need to be affordable. This view is shared by Mr De Croo.

"Firstly, this must be a temporary measure and secondly the measure should be directed towards those that need help. A third aspect is that of sustainability regarding the public finances”.  

So, it would appear that the Federal Prime Minister is not convinced that Mr Van Peterghem’s proposal to lower VAT on energy for all is the right path to take.

In the past the greens have not favoured lowering the rate of VAT on energy.

Speaking in the Federal Parliament on Thursday the Flemish green MP Kim Buyst said "The whole world faces rising energy prices. Don’t try and fool people by saying that we can make everything alright by passing one law here in Belgium”.

The Flemish greens would rather look to solutions in the medium term: renovation, investments in solar panels, water pumps and renewable energy.

The Federal Energy Minister Tinne Van der Straeten (Flemish Green) concedes that extra measures are needed now that energy prices have increased to much higher levels than had been predicted a couple of months ago. Nevertheless, she opposes both lowering the VAT rate on energy for all and the Francophone socialists’ proposal to offer an energy cheque to help those that need it pay they energy bills.

Speaking on Thursday evening’s edition of VRT News’ weekday evening topical discussion programme ‘De afspraak’, Ms Van der Straeten said reducing VAT on energy for a specific group could be an option. This group would be wider than those that currently pay the reduced “social” tariff for their electricity and gas.

She added that the Federal Government will reach a decision on what measures should be taken as soon as possible.



Top stories