Opposed to the reduction of VAT on electricity to 5.5% proposed by the RN, senators suggest a “targeted” reduction in taxation

Senators will deliver the conclusions of their commission of inquiry into electricity prices on Thursday. Among their proposals is a targeted reduction in taxation only on the first megawatt hours consumed.

After six months of work and 140 hearings on the price of electricity, the Senate inquiry committee proposed, on Thursday, July 4, to lower taxes, but without a general reduction in VAT to 5.5%. The senators are in total disagreement with this promise that Jordan Bardella wishes to implement, if he reaches Matignon. The centrist senators, at the origin of the inquiry committee launched at the beginning of 2024, without any link, therefore with the rushed legislative elections, consider that it would be “too costly for public finances”Vincent Delahaye, the commission’s rapporteur, in fact estimates that the RN is proposing 12 billion euros for the state budget, while the Senate’s version would “only” cost three and a half billion, while reducing the consumer’s bill.

Senators suggest lowering VAT to 5.5% for everyone, but only on one “basic consumption”in order to meet the needs of “first necessity”. This “basic consumption” would be calculated based on the average volume of electricity used by a household in a dwelling of 80m2, i.e. 4.5 MWh per year if the heating is not electric, 6 MWh with electric heating. VAT would therefore be 5.5% on this first tranche and other taxes would also be reduced. The senators estimate that they could thus reduce the basic bill by 40%, with 600 euros of annual savings for a household that consumes its 6 MWh.

Beyond this basic package valid for all, for those who consume more electricity, VAT would remain at 20%. Clearly, in the system imagined by the Senate, if you have larger than average housing, with many more electrical appliances, it is because you have more income and therefore you can pay your electricity at the current rate. This mechanism would be “more just” socially than the general decline of the RN, according to a senator, because “If you consume 10 times more than the average, proportionally you benefit much more from the VAT at 5.5 and you cost the State budget more!”