• Ursula von der Leyen, President of the European Commission: “If we look at the average energy bills of our industry in the European Union, 34% of those bills are taxes.”

  • We tax electricity to sustain the welfare state, but that very tax weakens the industry that generates the wealth to fund it. It’s the snake eating its own tail — only this time, in macroeconomic form.

  • The best kind of tax is one collected from a prosperous economy. And a prosperous economy needs a competitive industrial base.

October 24, 2025

The recent blow struck by European Commission President Ursula von der Leyen – urging Member States to cut electricity taxes that weigh down industry – has exposed a paradox we’ve been feeding for years without daring to face it: we’ve turned electricity, the energy vector of the future, into a fiscal cash cow.

Von der Leyen didn’t mince her words when she pointed out that a full third (34%) of industrial energy bills in Europe are taxes -a surcharge that, being fifteen times higher than that on gasoline, is eroding Europe’s capacity to compete globally.

States need revenue to fund healthcare, education, pensions -the whole scaffolding of the European social model that defines us. But when that revenue is drawn precisely from what should be our trump card -an electrified, decarbonized, and competitive industrial sector -we’re sawing off the branch we’re sitting on.

Because when tax hunger chokes the main lever of industrial competitiveness, that industry stops investing, stops growing, stops innovating. And an industry that doesn’t grow generates less activity, less employment, and fewer taxable bases. In the end, less revenue. It’s the perfect vicious circle: we tax electricity to maintain the welfare state, but that tax weakens the very industry that sustains it. The snake eating its own tail, in macroeconomic form.

At Foro Industria y Energía, we’ve long argued that energy management is not merely a technical or environmental issue -it’s a strategic lever of competitiveness. Von der Leyen’s call to lower electricity taxes isn’t liberal naïveté or ideological whimsy. It’s pure pragmatism in the face of an existential crossroads: Europe has bet everything on industrial electrification as the driving force of both the energy transition and strategic autonomy.

But if electrifying becomes prohibitively expensive due to taxation, European industry will be left watching as competitors -with cheaper, less-taxed energy- take the production, the jobs, and the industrial muscle elsewhere. The question is not whether we can afford to lower electricity taxes. It’s whether we can afford not to.

Finding balance won’t be easy. It requires political courage to redesign fiscal structures that have been entrenched for decades; creativity to find new sources of revenue without slowing down electrification; and long-term vision to understand that sometimes collecting less today means preserving the ability to collect tomorrow.

The challenge, then, is not to choose between public revenue and competitiveness, but to find the sweet spot where both reinforce one another. Only then can we lighten the load on industry, accelerate electrification without sacrificing social cohesion, and keep the wheels of progress turning for everyone’s benefit.

Because in the end, the best tax is the one levied on a prosperous economy.
And a prosperous economy needs a competitive industry.
And that industry needs affordable electricity.