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EU VAT Cuts Prompted by Energy Price Hikes Seen as Ineffective

Jan. 19, 2022, 9:45 AM

Skyrocketing energy prices for households and companies are prompting European governments to do something that not all agree is a good idea: Cut value-added taxes on gas and electricity bills to soften the blow.

Critics say that the cuts would benefit mainly the wealthy, who are typically among the heaviest energy consumers.

The Czech Republic’s new government recently rejected calls to extend a 0% VAT rate—approved by the previous government of Andrej Babis—through 2022 partly on those grounds. Another reason was that the VAT rate under EU rules can’t be cut below 5%—which EU countries may apply to only ...