Govt to compensate hiked energy prices

The government on Friday decided to take temporary targeted measures in response to rising energy prices, said an official press release.

The measures are particularly focused on transport and target households, providers of professional transport services and agricultural entrepreneurs. The measures include both short- and long-term.

The government has already taken action with respect to the price of electricity. As of the start of 2021, the electricity tax for industrial users, data centres and agriculture was reduced to the minimum rate allowed by the EU.

This year, a lower electricity tax rate will be expanded to certain heat pumps, electrical boilers and to a larger number of data centres. The position of consumers on the electricity market has been improved by intervening in energy transmission prices. The amount of transmission fees that can be charged to customers in 2022 is about EUR 370 million less than in 2020.

The maximum deduction for travel expenses between home and the workplace will be temporarily increased from EUR 7,000 to EUR 8,400 in taxes for 2022. In addition, the mileage allowance for commuting expenses when using one's own car will be temporarily increased to EUR 0.30/km from the existing EUR 0.25/km.

The changes to the deduction for commuting expenses will impact the taxation of approximately 570,000 taxpayers. Assessed statically at the 2022 level, they will reduce tax revenue by about EUR 142 million.

The deductibility of park-and-ride expenses for trips between home and the workplace will also be examined.

Agricultural production buildings will be temporarily exempted from real estate tax for 2022, provided that doing to is acceptable under EU law.

The government will launch discussions on the matter with the European Commission. This measure will be compensated to municipalities in accordance with the Government Programme. If EU legislation does not permit this measure, expenses incurred by agriculture due to the energy crisis will be compensated through other instruments as part of supplementary budget preparation.

The government is also preparing measures to improve the income and profitability development of agriculture over the short- and long-term, to balance food chain operations and to ensure security of supply.

The Ministry of Finance, Ministry of Transport and Communications and the Ministry of the Environment are jointly preparing a government loan guarantee model for private households and a government deficiency guarantee model for housing companies to support climate-friendly investments.

Preparation of an occupational diesel tax system will begin. The preparation work will assess whether an occupational diesel system can be implemented on the basis of the current system or by removing the direct tax subsidy for diesel and retroactively refunding tax paid for diesel used in professional transport services. The Government’s climate objectives will be taken into account in the preparation.

The Ministry of Finance, in cooperation with the Ministry of Transport and Communications, the Ministry of Social Affairs and Health and other relevant ministries, will prepare a financial support model for government coalition talks in spring 2023. The aim of the model is, on the one hand, to make the energy tax system more fair from the perspective of climate and, on the other hand, to respond to the unreasonable social consequences of spikes in fuel market prices.

The goal of preparation is to create a model in which support can be granted to households on the basis of income and region. The goal is also to determine whether the model could incorporate an element that would enable income support to be paid to households automatically in the event of a sudden spike in market prices.

The government will issue a recommendation that increased costs of living caused by increases to energy (incl. electricity) prices be taken into consideration when granting social assistance. The goal of the recommendation is to ease the difficulties experienced by lowest-income households due to sudden deteriorations of the economic situation.