This increase will have direct consequences on the account of 11 million French people.
Slowly but surely the cold and winter are arriving everywhere in France. The outside temperatures drop and, consequently, the heating turns on. For many French people, heating is done with gas and, for a part of the population, this energy is also used for cooking. In total, around 11 million households use gas every day.
As with electricity, the amount of bills continued to increase over the months. And the situation will not improve because the State intends to multiply the tax applied on this energy by 4 within a few weeks, starting from the beginning of 2025.
Various lines appear on the gas bill: subscription, consumption, transport tariff contribution and tax on domestic natural gas consumption. An indication is added to each of these descriptions: the amount of VAT. It is 5.5 or 20% depending on the title.
From 1 January the VAT on subscriptions should increase from 5.5 to 20%, i.e. a multiplication of the rate (almost) by four. This is an adjustment so that France complies with what the European Union imposes.
Two examples to clearly understand the impact on the portfolio. In July 2022, Mireille joined the “Gaz Energie guaranteed for 3 years” offer proposed by Engie. In the price list he was told that the subscription would cost him around 20 euros per month during this period (the exact price varies depending on the number of days in the month). A price “excluding exchange taxes” is specified. Since the State increases the VAT on the subscription, this will be reflected in the invoice. From January he will therefore pay 2.50 euros more every month, until the contract expires at the end of June, or 15 euros more than expected.
For his part, Thierry has the “Gaz Adapt 1 year” contract, again with Engie, from November 2024. Here too the promise of a fixed price is made outside of the tax changes. With the VAT increase, the monthly price of your subscription will increase by around 3 euros, or 30 euros more than expected until next November, the expiry date of your contract.
Bad news but it could be painless. If the price of gas per KwH fell during the year, the increase in VAT on the subscription would be offset. But nothing is certain yet, unlike electricity. Furthermore, for all households whose gas contract is expiring, you can expect to pay more to subscribe to this energy: on top of VAT, all base prices have skyrocketed. Checkout will still be painful.
How can consumers better understand their gas bills to make informed decisions amid price hikes?
Interview between Time.news Editor and Energy Expert
Time.news Editor (TNE): Welcome to Time.news! Today, we’re discussing an urgent topic affecting millions of households in France: the significant increase in gas bills due to upcoming changes in taxation. Joining us is Dr. Marie Lefevre, an energy economist and expert in utility regulation. Thank you for being here, Dr. Lefevre.
Dr. Marie Lefevre (ML): Thank you for having me.
TNE: Let’s jump right in. The article mentions that the French government plans to increase VAT on gas subscription fees from 5.5% to 20% starting January 1st. This seems like a dramatic rise. What are the potential impacts on the average household?
ML: Absolutely, it’s a heavy burden for many. For the 11 million households that rely on gas for heating and cooking, this increase translates to hundreds of euros more per year, just for the subscription alone. This is particularly concerning given that many families are already struggling with rising costs of living.
TNE: You’ve hit the nail on the head. The article notes that this change is expected to exacerbate the situation. How do you foresee this affecting consumer behavior?
ML: Well, with such a steep increase in the cost of gas, I’d expect to see more households considering alternative energy sources, such as electric heating or even solar solutions, if they can afford the upfront investment. Additionally, many may opt to consume less gas, which could lead to a shift in cooking and heating habits.
TNE: Interesting. And what about the broader implications for the energy market in France?
ML: The increase in gas prices may accelerate the transition towards renewable energy sources, which is a key goal of the EU. However, it also risks leaving low-income households behind if they cannot afford these alternatives. Policymakers would need to implement safety nets or subsidies to protect vulnerable populations.
TNE: Speaking of policies, do you believe the government has done enough to prepare for this change?
ML: In my opinion, more needs to be done. While the intention behind this tax increase might be to support a greener economy, it lacks foresight regarding the immediate challenges families face. There should have been a more gradual increase or at least communication about impending changes to allow households to adjust.
TNE: A valid point. The article highlights various lines on gas bills, including transport tariffs and the tax on domestic consumption. Can you explain why it’s important for consumers to understand these breakdowns?
ML: Understanding these elements empowers consumers to make informed decisions. When households comprehend what they’re being charged for—be it subscription, transport, or taxes—they are better equipped to challenge incorrect bills, seek out competitive rates, and advocate for fair pricing. Transparency in billing is crucial for consumer trust in energy markets.
TNE: Thank you for that insight, Dr. Lefevre. As we wrap up, what advice would you give to households bracing for these changes?
ML: I advise families to start monitoring their gas usage and explore ways to reduce it—whether through efficiency measures or by evaluating alternative energy options. Additionally, staying informed about government assistance programs can also provide crucial support during this transition.
TNE: Wise words, indeed. Thank you for your time today and for shedding light on such an important issue, Dr. Lefevre.
ML: Thank you for having me! It was a pleasure.
TNE: And thank you to our viewers for tuning in to this important discussion. Stay warm and informed as we navigate these challenging times together.