Rising energy costs push left-wing parties further into the budget debate in the federal government. The €2 billion that Prime Minister Alexandre de Croo (Open VLD) wants to save goes against the Socialist veto.
Prime Minister de Croo has expressed his hope that a plan to restart and transition our country will be put in place during this weekend’s budget meeting. But this intention has been overshadowed by the political debate over energy prices. The annual bill for a family with an average electricity consumption of more than 1,000 euros, and the natural gas bill even exceeded 1,600 euros. Electricity wasn’t that expensive three years ago, and the price of gas is the highest in ten years. Senior ministers will meet on Saturday afternoon to discuss measures to curb the increase. There were also consultations until late Friday evening.
On the left, a rising energy bill is being used to cool already limited savings ambitions. After the crisis of the coronavirus outbreak and the floods, we now have a third energy crisis. This is not the time to default,” the Socialist Cabinet said on Friday. Next year’s budget deficit is estimated at €21.3 billion, or 4.14 percent of GDP. De Croo aims for a budget effort of €2 billion, or 0.4 percent of GDP. However, there is still no consensus on this number.
- The federal government wants to take measures to mitigate the rising energy bill.
- Prime Minister de Croo wants to save €2 billion, but the Socialists are using the “energy crisis” to cool their budget ambitions.
- There are savings that don’t hurt much on the table.
All sides agree that “something” must be done to reduce energy bills. Over the past week, a whole series of balloons have been launched. The Greens and Socialists are pushing for an extension of the expanded social energy tariff. Since this year, about one million households have been covered at this low rate, which is double what it was in pre-Corona times. The proposal is to maintain this arrangement next year, which will cost 200 million euros.
However, many families cannot claim this and that is why politicians want to go further. Due to the higher prices, the government is also seeing an increase in VAT revenue. There is little enthusiasm to cut the value-added tax from 21 to 6 percent due to the higher cost, but a political consensus is forming to allow the additional income to flow back into the population. According to Finance Minister Vincent van Betteghem (CD&V), revenue will increase by €200 million. According to Vooruit, that’s up to 350 million.
After the coronavirus crisis and the floods, we now have a third crisis with energy. Now is not the time to cut.
The question is how this amount can be returned. The Minister of Labor and Economy, Pierre-Yves Dermann, is demanding a €100 energy check. However, this is met with resistance from liberals, CD&V and Groen, because it is a one-time measure that benefits everyone, including those who see little or no increase in their energy bill. The cost has also risen to half a billion euros.
So it seems that a different line of thought has a better chance. Under European pressure, the federal government decided to replace the federal energy tax with a selective tax. Thus the fee, the percentages on the price, becomes a fixed amount, so that the bill does not increase further in case of higher prices. Even MR is in favor of the cliquet system, where the excise duty goes down when prices go up and vice versa.
Expanding the broader social tariff for electricity, natural gas, and other energy measures fits with a broader wish list on the table during budget discussions. In all, it concerns 43 projects worth more than 3 billion euros. To keep the budget on track, funds must be made available to finance the new policy. In order to be able to invest more, the Socialists prefer to limit the budget exercise to 1 billion euros instead of the 2 billion that De Croo aspires to.
What does it mean for us to be able to tell our children and grandchildren that the budget is in balance, but the world has become unlivable due to climate change?
“What does it mean for us to be able to tell our children and grandchildren that the budget is in balance, but that the world has become unlivable because of climate change?” said Paul Magnet, head of the Socialist Party, on French radio. The interpretation of the billion targeted by the Socialist Party had already been determined when the government was formed. These include the transfer of the European directive on e-commerce, the increase in excise duties on tobacco, the end of tax settlement, and the fight against fraud.
There is a budget schedule on the table for additional budget effort – whether it is made to increase deficit reduction or to fund new policies. In any case, there is the stock tax, which should yield 430 million euros from next year. In addition, selective tax increases are targeted, for example on professional diesels (50 million), a few limited increases in value-added tax (20 million) and a curtailment of the favorable regime enjoyed by top athletes in Social Security (30 million) .
The list also includes a series of classics. This relates to painless measures that generate money primarily on paper, such as charging additional dividend income from government contributions (100 million) or increasing the employment rate (100 million). All sides seem to favor tough measures or ambitious reforms. But even then, the rapid descent seems difficult. The initial timing – an agreement by Monday morning – will be difficult, according to various sources.
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