The Dutch government has announced almost €1 billion in measures to compensate householders and motorists for soaring fuel costs in the wake of the Middle East war.

Commuters will be able to claim an extra two cents a kilometre for travel expenses in their annual tax return, while road tax will be cut by 50% for commercial users and suspended altogether for delivery lorries from July 1.

The cabinet is also plunging €195 million into the energy relief fund to support the poorest households and commit an extra €180 million to a loan facility for homeowners to fund sustainability measures such as better insulation.

Until now the finance ministry has adopted a “wait and see” approach to mitigating rising fuel costs in a country that has some of the highest pump prices in Europe, arguing that any funding need to be carefully structured to reach those who need it most.

“This way the cabinet has space for additional measures if more serious scenarios emerge,” the ministry said in announcing its plans.

Finance minister Eelco Heinen has also checked his earlier plan to phase out subsidies for electric vehicles, allocating €50 million to a subsidy fund for owners of older petrol and diesel cars who scrap them in favour of an EV.

But the Netherlands is continuing to resist following neighbouring countries that have cut or capped fuel pump prices, which topped €2.50 a litre last month.

Germany last week announced a cut to fuel duty worth 17 cents a litre, which would bring petrol prices down below €2 and diesel to around €2.10, while in Belgium the average petrol price is €1.87, with diesel costing €2.33.

The average price in the Netherlands is currently €2.26 for a litre of petrol and €2.28 for diesel, according to the ANWB.

The government will fund the measures by raising duty on alcohol and abolishing the higher income tax threshold for startup businesses from 2027.