Dutch households pay 32 times more energy tax than big users per KWh; Call to lower VAT

The Consumentenbond wants the Dutch government to lower the VAT rate on electricity to make the energy bill manageable for hundreds of thousands of Dutch households. “Ordinary households now pay no less than 32 times as much energy tax per kilowatt hour of electricity in the Netherlands as large business consumers,” the consumer’s association told the Telegraaf.

On Wednesday, the Consumentenbond, along with numerous energy experts, will argue in parliament for a lower VAT rate on electricity for households and small users.

“This is allowed according to the rules in Brussels,” a spokesperson for the Consumentenbond told the newspaper. A European directive states that the VAT rate could be reduced from 21 to 9 percent. Small consumers like households and self-employed persons deserve this financial support because they pay relatively high taxes, according to the experts.

Martien Visser, a lecturer on the energy transition at the Hanze University of Applied Sciences Groningen, previously advocated for lowering energy bills by halving energy taxes, making hybrid heat pumps mandatory, and continuing insulating homes on a large scale. Cutting the taxes will already help a lot, Visser said. “Becaue the tax on energy is much higher than the costs of gas and electricity themselves.”

According to research institute TNO, over 640,000 Dutch households will face payment problems this year if energy prices rise. People who live in poorly insulated homes with a low energy label, no heat pump, and no solar panels are particularly vulnerable. According to the budget institute Nibud, the energy bill for a home with energy label A or B is around 500 euros lower per year than the same home with the lowest energy labels F and G.

Research agency CE Delf calculated that the average household’s gas bill will rise from an average of 1,200 euros per year in 2021 to possibly 2,300 euros per year in 2030 as things stand now. And researcher Makrteffect calculated that grid management costs will rise from 358 euros per year now to 948 euros per year in 2040.

That is unaffordable for many households, who might have to start cutting down on necessities just to keep the lights on, the Consumentenbond argues. The consumer’s association will try to convince the parliamentarians to cut the tax on gas for households, and pay for that by increasing the tax for companies.