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EU Countries Resort to VAT Cuts to Fight Energy Inflation

Germany this week became the latest European Union country to lower the sales tax on natural gas to ease the burden on consumers suffering from a historic spike in energy prices. Peers including Spain, Italy and the Netherlands have used similar measures to address the situation, though some governments in the bloc have targeted such relief at vulnerable groups or households with lower consumption, according to a tally by the Bruegel think tank in Brussels. Cutting taxes on natural gas in an indiscriminate way is viewed critically by many economists as it reduces incentives to save energy and also benefits consumers with higher incomes. 

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