The energy crisis continues as the Czech government seeks a solution

Energy prices are rising sharply, so the government wants to relieve people by waiving the renewable energy payment and reducing VAT to zero. The lower tax could apply next year, while Prime Minister Babiš stated that the government could temporarily reduce or abolish VAT on household energy because prices are rising dramatically.

Industry and Trade Minister Karel Havlícek (ANO) said last week, “Unfortunately, the situation of the European energy market is deteriorating. We’ve also planned certain urgent actions, such as immediately aiding homes. This one-time solution should relieve them of CZK 1 200 to CZK 1 300 per household in the following year. However, because stock market prices indicate that the crisis is worsening, we are willing to decrease VAT from 21% to maybe 0%, although we have yet to calculate this.”

The real question is if the concessions mentioned and the decreased VAT will result in consumers paying the same amount for energy as they do now. According to Karel Havlíček, ” It is impossible to predict at this time since no one knows how much energy prices will rise next year. They will pay the same if it is up to 20%, which is what we can  predict for the time being.”

The new House of Commons will have to prepare for either the VAT reduction or abolition to come into force. However, it should be noted that this is not a matter of days. It must be prepared in the next few weeks so that Parliament might agree on it in the autumn, taking effect from the following year.