Package of measures to cushion the impact of rising energy prices and inflation
The government is introducing new supplementary measures to cushion the impact of rising energy prices and persistent inflation on low- and middle-income earners. Inflation may rise substantially this year, possibly reaching 5.2%. This is due mainly to higher energy prices. Purchasing power is expected to fall by 2.7% on average. The government is therefore raising the one-off energy allowance (energietoeslag) for people on incomes around the level of social assistance benefit to € 800. It is also lowering the rate of value-added tax (VAT) on energy from 21% to 9%, and the excise duty on petrol and diesel will be cut by 21%. Finally, the government is bringing forward spending of € 150 million, originally earmarked for 2026, to help low-income households take energy-saving measures. These measures were announced in a letter to the House of Representatives from Karien van Gennip (Minister of Social Affairs and Employment), Sigrid Kaag (Minister of Finance), Carola Schouten (Minister for Poverty Policy, Participation and Pensions), Micky Adriaansens (Minister of Economic Affairs and Climate Policy), Rob Jetten (Minister for Climate and Energy Policy), and Marnix van Rij (State Secretary for Tax Affairs and the Tax Administration).
Increase in one-off energy allowance for people on low incomes
At the end of 2021, the previous government announced it would set aside € 3.2 billion to reduce energy tax. It also presented plans for a one-off energy allowance of around € 200 per household to mitigate the impact of higher energy costs on people on incomes around the level of social assistance benefit. Older people on low incomes will also be eligible for the allowance. This one-off payment will now be raised to € 800 per eligible household. The government and municipalities will get this money to the people concerned as soon as they can.
Reduction in VAT on energy and excise duty on petrol and diesel
The government plans to cut the rate of VAT on energy (natural gas, electricity and district heating) from 21% to 9% for six months from 1 July this year. This measure will bring down energy bills for households with average consumption by around € 140 over the period. The government also proposes reducing excise duty on petrol and diesel by 21%, from 1 April 2022 until the end of the year. This will lower the price of petrol by 17.3 cents per litre and that of diesel by 11.1 cents per litre.
More money for households to take energy-saving measures
At the end of last year, the previous government decided to earmark € 150 million to help households make their homes more sustainable. An additional € 150 million is now being provided to take extra energy-saving measures. Money is also being set aside for a campaign to raise people's awareness of the different ways they can save energy.
Caribbean part of the Netherlands
€ 5 million is being made available to mitigate the impact of rising energy prices in the Caribbean part of the Netherlands. Detailed plans will be announced as soon as possible.
Covering the costs
The temporary package of measures will affect the budget. This additional package will cost a total of € 2.8 billion. The government considers it crucial that this cost is covered properly, to avoid passing on the bill to future generations. The government will fund the package in part from extra gas revenue. It will also use remaining funds from the Brexit Adjustment Reserve (BAR). A maximum of € 364 million in BAR funds is available.