“The Commission stands ready to advise Member States on how best to use the legal framework and will assess all requests for country-specific derogations under the Energy Taxation Directive.. However, reusing higher revenues from energy taxes and carbon prices or from abnormal profits from some energy companies could help fund specific and temporary measures to support vulnerable households and businesses, such as in the form of checks or refunds,” said an official source from the agency. community administration in a written response sent to the Lusa office.
A day after Prime Minister António Costa assured Portugal will support the European Commission’s proposal to tax at least 33% on the extraordinary profits of energy companies, Brussels points out that “These measures would be a more efficient and effective solution to address the affordability of energy prices, without creating disincentives to energy consumption and in particular fossil fuel consumption.”, when the institution sets targets for reducing the demand for electricity and gas in the European Union (EU).
In replying to Lusa, regarding the measures announced by the Portuguese government to mitigate the effects of inflation and the rise in energy costs – which amount to €2.4 billion – the official source of the community administration said that “direct support and targeting vulnerable citizens and businesses can help citizens and businesses struggling with excessive energy prices, without negatively impacting the common environmental and budgetary perspectives of Member States”.
The situation also arises after the Portuguese government announced at the beginning of the month the reduction of the VAT rate on electricity from 13% to 6%, with the aim of entering into force by October 1, and when, for example, Spain, , has already advanced with similar measures, for light and for gas.
The new European energy tax directive makes common VAT rules more flexible, gives governments more freedom to set rates and updates the list of goods and services to which countries can apply reduced rates.
The new regime allows the application of reduced VAT rates – subject to the minimum of 5% – on natural gas, electricity and district heating, without imposing an obligation to notify the European Commission.
Member States cannot have more than two different reduced VAT rates.
Exactly a week ago, the European Commission proposed a temporary mandatory 5% cut in peak electricity consumption, which is more expensive, and a 10% drop in overall demand, to lower gas prices.
In the current configuration of the European market, gas determines the world price of electricity when it is used, as all producers receive the same price for the same product — electricity — when it enters the grid.
Also a week ago, Brussels proposed a 33% tax on the unexpected profits of oil, gas, coal and refinery companies, whose revenues should be “collected by Member States and channeled to energy consumers”, in order to lower prices.
Last August, the EU’s proposed target of a 15% reduction in gas consumption by spring 2023, proposed by the EU administration, came into effect last August, with a view to increasing storage in the face of a potential disruption to the Russian supplies.
Geopolitical tensions resulting from the war in Ukraine are affecting the European energy market, not least because the EU is dependent on Russian fossil fuels such as gas.
Source: DN
