Electricity subsidies and zero vat on essentials to end on October 1st

The Ministry of Finance announced today that starting October 1, 2024, it will stop the staggered electricity subsidy and the zero VAT rate on basic goods. These measures were designed to help households deal with rising costs of living.

The electricity subsidy had been in place for bills from July to October 2024, and the zero VAT rate applied to essential items like bread, milk, eggs, and hygiene products. The government estimated that these support measures would cost around €201 million from March 2023 to October 2024.

However, officials noted that inflation has dropped significantly and is expected to stabilize at around 2%. Electricity and fuel prices have also decreased, leading the government to conclude that ongoing support is no longer necessary. They emphasized that too much government help with energy prices doesn’t encourage people to save energy.

In addition, many allowances and pensions are linked to cost-of-living increases, which helps offset price rises. As a result, the Ministry believes the reasons for providing these subsidies are no longer valid.

From October 1, the Tax Department will return to the previous VAT rates for essential goods, marking a significant shift for families who have relied on these subsidies during tough economic times.