The Dutch government is said to be working on up to 16 billion euros ($16 billion) in funding to alleviate the burden of high energy prices and runaway inflation on its citizens.
The plan will include a 10% increase to the minimum wage, a reduction to energy taxes and targeted subsidies to lower income households, according to people familiar with the matter.
The package would be financed through a combination of higher income from the Groningen gas field, a profit tax increase on small and medium-sized enterprises and a windfall tax on companies extracting oil and gas, said the people, who spoke on condition of anonymity to discuss internal deliberations.
The profit tax on businesses will increase to 19% from 15%, the people said, in effort to raise 1.5 billion euros. The windfall tax will bring in around 2 billion euros in 2023, the people said, with the rest of the funding coming mostly from higher gas revenue from the Groningen field.
The plan will be announced during the country’s budget day on Sept. 20. The size and details of the plan were first reported by Dutch financial newspaper Het Financieele Dagblad. The Dutch Finance Ministry declined to comment.
The prospects of a prolonged cutoff from Russian gas supplies is pushing European governments toward emergency measures and energy rationing to protect companies and consumers from soaring costs. European Union energy ministers are set to discuss proposals to curb power prices when they hold an emergency meeting on Friday — including gas-price caps and a suspension of power derivatives trading.
Price caps will be the most difficult part of the discussion at the bloc’s meeting this week, the Dutch Minister for Climate and Energy Policy Rob Jetten told Bloomberg on Friday. He said he prefers subsidies for low-income households over price caps “at the moment.”
Consumers are facing soaring energy bills on top of other inflation-driven cost increases, further denting discretionary spending.
The purchasing power of Dutch citizens dropped the most in the country’s history after Russian invasion of Ukraine drove energy prices higher, according the Netherlands Bureau for Economic Policy Analysis, or the CPB. As a result, 1.3 million people in the Netherlands are living in poverty this year, the CPB said.
Recommended for you
