Netherlands announces $1.1B relief package to offset rising energy costs

The Dutch government has unveiled a package of measures worth nearly €1 billion ($1.1 billion) aimed at cushioning households and businesses from rising energy costs linked to the ongoing conflict in the Middle East.

As part of the plan, the tax-free mileage allowance for employees will increase by €0.02 to €0.25 per kilometer, applied retroactively for the entire year, Dutch broadcaster NOS reported on Monday.

The government estimates this adjustment translates into a benefit of €0.30 per liter of fuel.

In addition, motor vehicle tax for so-called "grey license plate" vans, commonly used by small businesses, will be halved starting July 1 through the end of the year.

Tax on trucks will be reduced to zero over the same period.

To support vulnerable households, €195 million will be allocated to the Energy Emergency Fund.

A further €180 million will be added to the existing national heat fund, which provides loans for home insulation and other sustainability improvements.

The government said over €600 million of the package consists of direct spending, while more than €300 million comes from tax reductions.

To finance the measures, excise duties on alcohol will rise in line with inflation next year, adding a few cents to the price per drink.

Despite calls from lawmakers, the government opted not to intervene in fuel prices at the pump, citing high costs and limited impact.

Officials estimate that reducing fuel prices by €0.10 per liter would cost the state around €1 billion.

The Dutch House of Representatives is set to debate the proposals on Wednesday, with a majority expected to support the measures.

Shipping through the Strait of Hormuz has been severely disrupted since the US-Israeli war against Iran began on Feb. 28.