Energy tax down by tens, but gas prices up by hundreds

Rising energy prices would allow millions of households to face a sharp rise in the bill. That was a concern to the House of Representatives. Therefore, during the General Political Reflections on Thursday, it was decided to reduce household energy costs by 375 million euros. Its just the question if thats going to make a difference.

The energy bills of each household are different, but at average consumption, about a third is energy taxes. They are thus reduced by 375 million euros. The Ministry of Economic Affairs, responsible for the cut, does not yet know how that will work out for households.

On the one hand, the electricity tax (ODE) is reduced and, on the other hand, the discount everyone gets on the energy tax is increased. Not only the eight million Dutch households but also companies seem to benefit from the reduction in energy costs because they also pay this tax and receive a discount. How exactly that reduction will be distributed is not clear. If the reduction is distributed equally to households alone, it will save about four tens per household per year.

The CBS calculated that at the beginning of 2021, a household with an average consumption of around 1500 euros per year was lost in energy costs. But as gas prices have risen sharply, someone who now concludes a new year contract pays about 500 euros more.

Thus, at the increased prices, the reduction has a limited effect at the moment. Whether the price of gas remains so high is uncertain. For example, a warm winter could decrease demand.

The Consumentenbond is pleased to see high energy costs. โ€œIts a beautiful best and a quick band-aid. If you want to do something about the high energy prices now, you dont escape such a measure, but you help people with it at a minimum.โ€

According to the union, it is better to help people structurally by insulating homes. The cabinet also announced on Tuesday that EUR 1.3 billion will be allocated to make homes and buildings more sustainable, half a billion of them for a national insulation programme.

Like the Consumentenbond, lector energy transition at Hanze University of Applied Sciences Groningen Martien Visser questions the effectiveness of the reduction. โ€œThis actually doesnt do anything about energy poverty. The money doesnt just end up with the people who need it most. Its more of a sweet for everyone, while the real concern comes with people with poorly isolated homes.โ€

Energy Poverty

A study published yesterday by TNO research firm found that 550,000 Dutch households live in so-called energy poverty. They have a high energy bill, mostly poorly isolated homes and low income. They spend 13-20 percent of their income on energy, compared with 5% on average for all households.

Peter Mulder, researcher at TNO: โ€œThis load relief is a patch on the wound, but it has not healed that wound. Energy bills that are too high can be better handled by improving homes, by isolating.โ€

Big Business Discount

In addition to isolation, the Consumentenbond also advocates a structural reduction in the energy load for small consumers. Large consumers, or large companies, pay much less tax than households.

โ€œThat has to be different,โ€ says director Sandra Molenaar. โ€œBy increasing the burden on the biggest polluters, you encourage them to take savings.โ€ The OECD, an organization of mostly wealthy countries, wrote this year that these energy tax reductions for large companies are slowing down the energy transition.

Electrification

The ratio of energy taxes paid by small and large companies has been improved by the House of Representatives. On Thursday it was also decided to reduce the energy tax on electricity (ODE) for companies by EUR 125 million.

This will make the tax relatively cheaper for small and medium-sized enterprises. Electricity compared to gas will also be cheaper and that should encourage SMEs to move away from gas.