European Commission to propose tax cuts on electricity to combat soaring energy costs

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BRUSSELS: European Union leaders are moving to slash electricity taxes as the conflict in Iran drives energy prices to record highs. With the Strait of Hormuz effectively closed, European gas prices have doubled since late February, prompting an urgent search for short-term economic relief.

To shield consumers, Commission President Ursula von der Leyen announced a proposal to recalibrate energy taxation, noting that electricity is currently taxed up to 15 times more than gas in some member states.

"In some cases, electricity is taxed much more than gas, up to 15 times more. And this cannot be so. We will propose to lower tax rates on electricity and to make sure that electricity is taxed less than fossil fuels," said Ursula von der Leyen, president of the commission.

In addition to tax relief, the Commission is introducing a €30 billion ($34.72 billion) "investment booster" to accelerate the transition to local, low-carbon energy. While some member states remain divided over reforms to the Emissions Trading System, the bloc’s immediate priority remains "temporary and targeted" measures to ensure industrial stability and fair competition amidst the ongoing regional crisis.