This is how the cabinet wants to soften purchasing power: lower excise duty on petrol, lower VAT on energy

It is also being examined whether poorly insulated houses can be tackled. There are already arrangements for this, but that may be where the turbo will go. The idea is that residents will then be visited by a DIY company, or a voucher to pay for insulating measures themselves. 

With the package of measures, the cabinet also hopes to meet the needs of middle-income groups, although priority is given to the lowest income group.  

For them, a law is already being drawn up that provides that some 800,000 households with an income at or just above the social minimum receive approximately 200 euros to help them pay their energy bills. That amount will be increased to a minimum of 400 euros.

The reduction in excise duties and the VAT intervention could come into effect on 1 July. That is the first feasible date to be able to turn fiscal buttons in a current budget year. 

Coalition parties want to reduce the VAT on energy bills from 21 percent now, to the low rate of 9 percent. All the way to 0 percent is also possible, but is considered less likely, because this is very expensive. 

Reducing excise duties is already a costly exercise. At the moment it is still almost 0.83 euros per liter for petrol and almost 0.53 euros for diesel. The reduction of every cent on petrol costs 42 million euros on an annual basis, for diesel the reduction is 57 million euros per cent. It is not yet clear how much less excise duty should be levied. Although one person concerned points out that it is more about 0.20 than 0.40 euros. 

According to an insider, the entire operation will probably involve around 2 to 4 billion euros. “It involves large amounts,” said another. 

The cabinet already announced on Wednesday that it would at least do something this year to improve the purchasing power of the lowest incomes. They also suffer the most from the high energy prices, because they spend relatively more of their income on energy bills. Their homes are also often poorly insulated.

The idea is that with lower excise duties and a lower VAT on energy, there is also something in it for middle incomes.

The government was already worried about the declining purchasing power due to high inflation and sky-high energy prices, but the invasion of Russia has made the purchasing power boom even harder. The Central Planning Bureau calculated this week that in the worst-case scenario , purchasing power will fall for the Dutch by 3.4 percent. Average purchasing power is likely to fall by 2.7 percent, the forecast is. That would be the biggest drop in purchasing power in 40 years.