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The return of the ratchet for gasoline in Belgium

  • Post category:Economy News
  • Reading time:4 mins read

The fuel prices continue to fluctuate strongly at the pump due to multiple factors and in particular that, which has become increasingly significant in recent weeks, of the weakness of the euro against the dollar. That said, this Saturday September 10the price of gasoline will rise below the 1.7 euro/l mark (- 4 eurocents), which is good news in itself.

Curiosity however, this drop in the overall price at the pump will be accompanied by a increase in excise duty on that same liter of fuel. Why ?

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In fact, during the spike in energy prices in recent months, the government Belgian granted a lump-sum reduction in excise duties of 17.5 eurocents.

In this “contract”, it was provided that a drop in the liter of fuel below 1.7 euro/l would lead to an increase in excise duties under the positive ratchet principle. This is precisely what is happening here.

An unsustainable decrease

Those who thought the lump sum reduction on excise duties would apply without stopping until March 2023 as announced by the government have therefore forgotten this detail: when the threshold of 1.7 euro/l is crossed downwards, this reactivates a ratchet system, here positive in the head of government “which corresponds at an increase in excise duties by half of the reduction generated on international markets » said the representative of the brafco (federation of fuel traders), Olivier Neirynck at the newspaper L’Écho.

Put simply, this means that prices are falling, but that 50% of this reduction is transformed into excise duties. Finally, the consumer therefore only benefits from 50% of this reduction. If other reductions were to take place in the coming weeks, the excise duties would therefore always be increased, scratching the passage always a little more the initial “rebate” of 17.5 eurocents.

Tomorrow, the price of a liter of gasoline will drop, but taxes will increase.  It's the return of the ratchet.

The bad news in this story is that this positive ratchet principle is also applied to the liter of great 98 although its price is far from the threshold of 1.7 euro/l. Why ? Well, because the super 98 is “harnessed” to the liter of great 95. It is therefore the latter reference product.

From this Saturday, the government will therefore receive more excise duty on a liter of gasoline. the rate excise increases by 33.05 euros per thousand liters, making a total of 488.58 euros per thousand liters.