Poor households see less government money from fuel and energy tax cuts

Recent tax cuts on fuel and energy are benefitting rich households more than poor or middle-income ones, according to reports by Trouw and De Groene Amsterdammer based on calculations by Investico. A third of the 2.1 billion euros the government is setting aside toward a reduction in VAT and petrol excise duties benefits the richest 20 percent of the Netherlands.

Poor households use less energy and fuel than rich ones. Because the tax cuts are actually a discount on petrol, diesel, gas and electricity, poor households are receiving a smaller percentage of the money the government has set aside. In addition, middle-income households –– which Finance Minister Sigrid Kaag said the government measures were mainly intended to benefit –– are receiving one fifth of the subsidy package. 

The calculations show that households with the lowest income jointly receive 11 percent of the lighting package. The very poorest households will also get 800 in a one-time energy allowance, but the other 800,000 households whose income falls between the social assistance level and an annual salary of 22,600 euros will be most significantly impacted, experts told the news outlets.

Meanwhile, the richest households will be compensated for 40 percent of the expected cost increase. Companies that use company cars will also receive part of this allowance.

“These kinds of measures should always be aimed specifically at the lowest incomes,” ING chief economist Marieke Blom told the news outlets. “This also keeps the total amount for the government low. Now the government is going to borrow large sums of money at the expense of future generations. And the government spends that money mainly on the richest people.”

No comment was made to either news outlet by ​​The Ministry of Finance or the Ministry of Social Affairs and Employment.