October 24, 2021

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Reform energy taxes and convert them into environmental taxes | the time

Belgium’s energy policy is based on the intertwining of taxes and subsidies. Reforming uniform environmental taxes could yield a double dividend.

Our tax system is a dragon that urgently needs a deep reform. A whole load of taxes is hidden, so that it goes unnoticed in the entirety of the government burden imposed on residents and businesses. Most noticeable is the energy tax jungle, which has apparently turned your electric bill into an additional tax bill.

the essence

  • from the authors
  • Robin Paytens is an energy policy expert at 3E. Evan van de Kloot is chief economist at the Itinera Institute.
  • Subject
  • Belgium’s energy policy is based on the intertwining of taxes and subsidies.
  • Suggestion or offer
  • Introducing a gradual reform to standardize environmental taxes. This produces a double dividend: More inefficient taxes can be eliminated and our economy can become greener.

Any proposed tax reform should make the system more transparent and simple. International efforts have also been made for years to broaden the tax base. Dilation provides the means to put less pressure on labor and leads to a More efficient tax system.

In this context, in the context of combating climate change, there are calls for a carbon tax. This is a legitimate debate, if it takes into account many of the current energy taxes that could be considered equivalent to segmented and inefficient carbon taxes. There is a great opportunity to reform it into a large-scale energy tax, which, combined with rational network definitions, provides the right incentives.

environmental tax

One of the most important margins for our country lies in environmental taxes. Essentially, this means that – bearing in mind the high overall tax burden – cuts elsewhere in the tax system can be financed by an environmental tax. We refer to this as a “double yield.” Not only could more inefficient taxes be cut, but the shift could also green the economy.

We are thinking here of tax cuts on labor financed by environmental taxes. Belgium is the European member state that, with 250 euros per inhabitant, is in the first place in subsidizing energy consumption. At €263 per person, we are in third place in providing subsidies to fossil fuels. He. She European average It is 72 percent and 35 percent, respectively. It is necessary to rationalize both the energy tax jungle and energy subsidies.


It looks like the energy tax jungle has turned your electric bill into an extra tax bill.

With €6.1 billion in tax levies on fuel and €1.4 billion in Flemish “public service obligations” on electricity and natural gas, energy in general is already heavily taxed, but not in a smart way from an environmental point of view.

carbon revolution

A well-thought-out gradual reform can be carried out and all energy taxes shifted carbon revolution because I am. With a carbon tax of just €110 per tonne of carbon dioxide, all families together will pay the same energy taxes as they do now. However, in reality, current energy taxes are very unevenly distributed: households today pay the equivalent of more than 300 euros per ton of carbon dioxide in energy taxes on electricity, gasoline and diesel, but the equivalent of less than 30 euros per ton on heating. Oil and natural gas consumption. The result is that our heating oil and gas prices are 20 per cent and 30 per cent lower, respectively, than the European average, and up to 35 per cent and 50 per cent lower than those of the Netherlands. However, our electricity price is the third highest in the European Union.


Deliberate, incremental reform and change in all energy taxes could lead to a major carbon revolution.

Thus, the current tax system means a huge carbon tax on electricity and a very low tax on natural gas and heating oil. This is largely due to the fact that the electricity bill contains all kinds of fees associated with the costs of supporting renewable electricity, costs that cannot arise with natural gas and fuel oil due to the lack of climate-friendly alternatives. The fact that energy conversion aims to switch from the use of fossil fuels to the use of electricity makes current energy taxation extremely problematic for our climate ambitions and makes the energy transition unnecessarily costly.

Energy experts are right to call for an end to fossil fuel subsidies and a comprehensive overhaul of our energy taxes. Economists argue in this debate for an incremental timeline. The central principle should be that we are converging towards a single price for CO22 and other damage costs to achieve the most cost-effective way to reduce our emissions. The predictability of the cycle over time is also very important in order to prevent market speculation and provide certainty to households and companies investing in the energy transition.

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