Ministries disagree on lowering energy VAT

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

Isamaa's energy VAT reduction proposal will be discussed by the Riigikogu today, but ministries do not agree on the suggestions. The plans would see VAT cut from 20 percent to 9 percent.

The party has suggested the reduction could apply to the VAT rate on gas, electricity and heat between January 1, 2022 and January 1, 2023. It would combat rising energy prices.

The Ministry of Finance does not want to introduce the support mechanism and says the measure is not targeted. It said the impact for the average consumer would be small, only a reduction of €4 or €5.

The ministry also noted that the impact of the cut may not reach consumers because the state does not set prices. It said those in need should receive help directly.

However, the Ministry of Economic Affairs and Communications agrees with the proposal but has said it should be limited from January to April 2022.

The government has not expressed an opinion on the matter yet.

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Editor: Helen Wright

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