The plenary chamber on Thursday gave the go-ahead for the VAT reduction from 21% to 6% on gas and electricity, coupled with the excise reform, from 1 April.
The Federal Government reached an agreement on a series of energy reforms a few weeks ago. The VAT reduction and related excise reform had been in the pipeline for some time. VAT on gas and electricity has already been reduced to 6% for about a year, but that was a "temporary" measure to reduce rising energy bills. From 1 April, that rate will become permanent.
At the same time, a reform of excise taxes (which are less subject to price fluctuations than VAT) will come into force. Additionally, Federal Finance Minister Vincent Van Peteghem's draft makes a distinction between basic consumption and wholesale consumption. If prices do rise sharply, the excess revenue will be deducted from basic consumption via excise duties.
The reform gained additional political weight in recent months because it heralded the resignation of Eva De Bleeker as State Secretary for the Budget. She had included in the budget only the price of the VAT reduction, without including excise duty revenues. Prime Minister Alexander De Croo consistently insisted that the reform had to be budget-neutral.
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In the federal opposition, the Flemish rightwing N-VA, far-right Vlaams Belang and radical left PVDA parties reiterated that this is not the case. While N-VA continued to insist on the underlying figures, Vlaams Belang called the reform a "flat tax increase," in which VAT is reduced but part of that reduction is replaced by excise duties.
PVDA also denounced that 2021 prices were being used as the basis for the reform, even though they had already risen that year, and argued that, as a result, they could no longer fall below the 2021 level.
