‘Basic package electricity fairer than lower VAT’

‘Basic package electricity fairer than lower VAT’
‘Basic package electricity fairer than lower VAT’

The German government announced on Sunday the introduction of a low-cost basic package of electricity. Details about this are not yet known. The basic principle is simple: Germans will pay a reduced rate subject to a power consumption that has yet to be determined. What is consumed above that ceiling will not be limited in price.

It is reminiscent of the way water is billed. A basic quantity of this is also distributed more cheaply. ‘The great advantage of this measure is that the consumer is encouraged to be economical’, says energy expert Danielle Devogelaer. ‘That is the big difference with measures that are, so to speak, a blank check for rich and poor alike. Think of the general reduction in VAT to 6 percent that the federal government has introduced. This increases the total discount a person enjoys the more he consumes. This system does not have that side effect. A single person who stays under the ceiling will receive a relatively much more discount on his electricity bill than someone who lives in a large villa and spills energy, and as a result consumes more than the ceiling. That makes this approach much fairer.’

But, warns Devogelaer, that does not mean that this measure can be introduced without too much discussion. ‘The devil is in the details. The question is at what level you will cap the basic consumption, at what rate this will be done, and who is eligible. Is that only for private individuals, or also for independent companies, for example? It is fodder for ideological discussions, which ultimately makes its implementation much more difficult than you might think at first glance. Still, this is definitely worth a look. All the more so because Belgium can introduce this on its own, while other measures are better taken in a European context.’

The article is in Dutch

Tags: Basic package electricity fairer VAT

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