Prime minister: VAT cut not a targeted measure, doesn't promote saving

Power meter.
Power meter. Source: Ken Mürk/ERR

The Reform Party opposes its coalition partner the Center Party's proposal of cutting VAT on electricity from 20 percent to 9 percent. Prime Minister Kaja Kallas said that energy price compensation measures should be targeted and promote saving energy.

The government on Thursday discussed ways of softening the blow delivered by skyrocketing energy prices, "Aktuaalne kaamera" reported. The proposal to lower the VAT rate on energy was taken to the government by Minister of Economic Affairs and Infrastructure Taavi Aas (Center). However, PM Kaja Kallas said that lowering the VAT on power is out of the question for the current heating season.

"It will not happen for the simple reason that lowering the VAT rate would require an amendment that would take at least three months to process. Secondly, it would not be a targeted measure but rather a universal one that would also help people who do not really need it. Thirdly, it would do nothing to promote saving energy," Kallas explained.

The government decided on Thursday that families with an income of €1,052 or less will be eligible for subsidies to help pay soaring energy bills.

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Editor: Marcus Turovski

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