Netherlands planning €1 billion economic relief package; Won’t cut petrol or diesel tax

The Dutch Cabinet is planning a billion-euro package of measures to provide relief for skyrocketing costs with ongoing tensions between the United States, Iran, Israel, and the Middle East driving up the price of oil. However, Prime Minister Rob Jetten’s minority coalition is not planning on cutting the excise tax on petrol, the highest in the European Union, nor on diesel.

The funding is mainly aimed at businesses and industries directly impacted by geopolitical instability and the associated high energy prices. The Cabinet is not planning further cuts to fuel excise duty, arguing that lowering fuel taxes would cost the state around €1 billion per year and would make fuel significantly cheaper only temporarily.

Based on NOS reports, the package is expected to include increased commuting allowances for workers, temporary relief on vehicle tax for commercial vans, and support for households facing high energy costs. It is also said to involve extra funding for home insulation and sustainability measures for businesses.

Reports say the package is currently being discussed in the Cabinet and will likely be aligned with opposition parties afterward to ensure it has enough political support.

Fuel prices are currently elevated, driven in part by higher crude oil costs amid geopolitical tensions. This month, the advisory price for Euro95 fluctuated around €2.55 to €2.59 per litre, reaching one of its highest levels in recent years.

The government is exploring several measures to offset rising transport and energy costs, including potential adjustments to motor vehicle taxation and a possible increase in the tax-free commuting allowance. These options are being considered as part of a broader package of fiscal measures aimed at supporting households and businesses, rather than through further reductions in fuel excise duties.

Consumers in the Netherlands pay 84.5 cents in excise tax per liter of petrol. The Dutch government also mandates a 55.2-cent tax on every liter of diesel, the eighth most expensive among EU countries. A 10-cent cut to the petrol tax would mean a loss of about a billion euros in tax revenue, according to NOS.

Over the eastern border, the German government announced on Monday that it will temporarily cut its rate on the two fuels by 17 cents. That means Germany’s excise tax on petrol will fall to 63.8 cents, and 45.3 cents for diesel. To the south, the Belgian government has not announced plans to cut its own 60-cent tax per liter of either fuel.

Drivers in the Netherlands who are a reasonable distance from either border often opt to fill the tank in a border country. That was the case long before Germany’s recent announcement. “This is very bad news for petrol station owners in the border region,” said Erik de Vries, director of independent filling station trade group NOVE.

In an interview with ANP on Monday, he predicted an increase in “fuel tourism” to Germany. “That already happens a lot to Belgium, but the difference with Germany was less significant.” This can have a broader impact if people do this as a day trip, by also choosing to shop for groceries there as well, he continued.

The Dutch levy on petrol compares to an EU average of 57.0 cents, and an EU minimum of 35.9 cents this year. The European Union average is 46.8 cents per liter of diesel, with a floor of 33.0 cents.