The Spanish Government has decided to significantly reduce the VAT rate on gas, from the current 21% to 5%, by the end of the year. The measure was announced by the President of the Spanish Government, Pedro Sánchez, at a time when gas prices in Europe are worrying and in which Portugal has already begun to take palliative measures, although without resorting, at least for now, to the tax reduction.
In an interview granted this Thursday to Cadena SER, Sánchez explained that the tax reduction aims to “lower the heating bill of Spanish families this autumn and winter” and thus “always protect the working middle class”.
Although the measure is scheduled, for the time being, to be in force until the end of the year, the leader of the Spanish Executive clarified that he does not rule out extending it to next year. The idea, he argues, is that “there is fiscal justice, a fair distribution of the consequences of Putin’s war”, following the same logic that had led the Government to also cut VAT on electricity last year, from 10% to 5%. .
The exception of Iberian gas, that is, the temporary mechanism adopted by Portugal and Spain to limit the average price, decoupling the prices of gas and electricity in the Iberian Peninsula, for 12 months, will be having positive effects, with average savings 15% on the gas bill, Sánchez added. But even so, the Spanish Government chose to adopt one more measure to limit price increases.
Moreover, this month the German Executive had already made a similar decision, announcing a reduction in gas from the current 19% to 7%, but with a longer duration: the measure will be in force until March 2024 and will cost 14,000 million euros total
How to avoid increases that can exceed 150% in gas? Change of contract and provider
In Portugal, the Government announced this month that it will allow, for a year, the return of families and small businesses to the regulated natural gas rate, in order to mitigate the effects of the gas increases announced for October, which may exceed 150%, according to EDP Comercial, and affect around 1.3 million customers. Galp announced this Tuesday that the increases in October will be around eight euros for “the most representative group of clients”.
Gasoline increase. Families and small businesses will be able to return to the cheapest regulated rate
Regarding the possibility of lowering VAT to deal with these increases, the Minister of the Environment, Duarte Cordeiro, stressed that the possibility of returning to the regulated rate will already have an impact on the final price of the gas bill, but it did not. exclude that it might be necessary to take additional measures. But, from what I see, it is really Spain that is moving in this direction.
Source: Observadora
