Why fuel taxes remain high in Belgium and the Netherlands

Fuel prices rise, government revenues rise with them

One of the most controversial aspects of high fuel prices is the way governments benefit financially from them. Fuel taxation in most European countries works through a combination of fixed excise duties and percentage-based VAT. Because VAT is calculated on the entire retail price (including excise duties) higher pump prices automatically increase government tax income.

In simple terms: when petrol becomes more expensive, government revenue rises as well. This creates a paradox that frustrates many motorists. While drivers face rising costs, the public treasury often sees an increase in income without changing tax policy at all. It is precisely this mechanism that has fueled political pressure for intervention across Europe.

Several European countries are already lowering taxes

Not all governments have chosen to remain passive. In response to rising fuel costs, a growing number of countries have implemented measures to protect consumers and businesses.

Italy, for example, temporarily reduced fuel excise duties by €0.25 per litre, while Austria introduced a smaller reduction of €0.05 per litre.

Spain adopted a far broader strategy, launching an €5-billion support package that includes lower VAT on fuel, subsidies and other energy relief measures.

Elsewhere, Poland drastically reduced VAT on fuel from 23% to 8%, while Sweden lowered fuel taxes and introduced compensation mechanisms for rising electricity costs.

Some countries go even further. Malta maintains a government-controlled fuel price, keeping petrol stable at around €1.34 per litre regardless of market fluctuations. In short: intervention is not unusual in Europe. Which makes the position of Belgium and the Netherlands all the more striking.

Belgium’s hesitation: budget pressure and European coordination

In Belgium, diesel prices recently surpassed €2.28 per litre, a historic high that has intensified calls for action. The government technically has several tools available, including the “reverse cliquet system”, which automatically reduces excise duties when fuel prices exceed certain thresholds.

This mechanism was used during the 2022 energy crisis following Russia’s invasion of Ukraine. However, the current federal government has so far refrained from activating it. The official reasoning combines two factors:

Budget discipline: Belgium already faces high public debt and rising interest costs. Lowering excise duties would immediately reduce government revenue.

European coordination: Authorities are reportedly waiting for potential EU-wide energy measures before acting individually.

In practice, this means Belgian drivers remain exposed to full market volatility.

The Netherlands: political pressure is growing

The situation in the Netherlands follows a similar pattern. Fuel prices have now surpassed levels seen during the 2022 energy crisis, yet the government has not announced new tax reductions.

This comes despite growing political pressure and public debate. Previously, temporary excise duty reductions were introduced to mitigate energy inflation. But policymakers now appear reluctant to repeat the measure unless the situation deteriorates further.

The result is a growing perception among motorists that governments are deliberately allowing fuel prices to remain high.

The elephant in the room: electrification policy

There is another dimension to this discussion that policymakers rarely state explicitly. European governments are currently pursuing the most ambitious transport decarbonisation agenda in history.

Key measures include:

• The EU ban on new combustion engine cars from 2035

• CO₂ fleet emission targets for manufacturers

• Expanding carbon pricing through the upcoming ETS2 system, which will also apply to road transport

All of these policies share the same objective: reducing fossil fuel consumption. High fuel prices, intentionally or not, accelerate that transition. Electric vehicles become financially more attractive. Fleet managers reconsider diesel cars. Consumers begin calculating total cost of ownership differently.

From a climate policy perspective, expensive fuel is not necessarily a problem, it can even be seen as a policy accelerator.

Businesses feel the pressure as well

The consequences extend far beyond private motorists. Companies operating vehicle fleets (from logistics firms to service providers) face rapidly rising operating costs.

For many SMEs, fuel remains one of the largest operational expenses after wages. When prices surge, margins shrink immediately. This is particularly challenging for sectors that cannot easily electrify yet, such as heavy transport, construction or agriculture.

As a result, the debate about fuel taxation increasingly intersects with broader questions about economic competitiveness and energy transition policy.

AutoNext Take

This situation perfectly illustrates the tension between short-term economic pressure and long-term climate policy. On one side, motorists and businesses expect governments to intervene when energy prices surge. That expectation was reinforced during the 2022 energy crisis, when temporary tax reductions were widely implemented.

On the other side, governments are trying to accelerate the shift toward electrification. Lowering fuel taxes may ease immediate pressure on drivers, but it also slows the transition policymakers are trying to achieve.

That creates a political dilemma. Helping drivers today may contradict long-term climate targets. But ignoring rising costs risks eroding public support for the energy transition altogether.

The real question is therefore not whether governments can lower fuel taxes. It is whether they still want to. And if current trends continue, drivers across Europe may have to prepare for a future where high fuel prices are not an exception, but the new normal.