HEALTHPLAN MAGAZINE

Spanish Prime Minister Pedro Sánchez has announced a VAT reduction on gas from October, to help reduce energy bills.

In a statement that was delivered in Ecuador in August, the Prime Minister stated that the Spanish government would be reducing the VAT on gas from 21 percent to 5 percent, in the hope it will help soften the blow of rising bills as we head into the winter months.

The new measure will come into force in October and last until December, this could however be extended into 2023.

Speaking to Cadena SER in a radio interview, Sánchez said that the reduction “is in line with the economic policy” of his government.

“We will do it now in autumn and the winter. It’s reasonable that we try to reduce the heating bills of the citizens of the country,” he said, adding that although the measure is set for three months, “we will be open to extending it over the next year as long as this very difficult situation lasts.”

Sánchez once again reinforced that the government “does not contemplate” restrictions on supplies of gas this winter, despite the fact that “the context is very uncertain.”

He explained that Spain has “a much more comfortable and safer situation” than other European countries who are more dependent on gas imports from Russia.

The measure to cut VAT on gas to 5 percent, was initially a proposal made by the opposition Partido Popular, and it is surmised that the new party leader, Alberto Núñez Feijóo, was prepared to request it in the Spanish Congress next week.

When asked how much money taxpayers will save as a result of the cut, Mr Sánchez was quite elusive with figures but he assured Spaniards that the reductions will be paid for by taxes on banks and the profits of energy companies.

However, since Sánchez’s announcement, households and consumer groups across Spain have been trying to work out exactly how much the VAT cut will save everyone.

According to Facua and OCU, two of Spain’s main consumer associations, a normal household's monthly savings will be between 5 and 19 euros, depending on the type of contract it has.

Facua estimates that a household with moderate gas usage of around 4,800 kWh per year will save 5 euros per month, whilst those with a higher usage of up to 9,600 kWh, will see bills reduced by 9.60 euros per month.

A spokesman for Facua described the VAT cut as “a fair and necessary measure,” but added that “the impact it is going to have on the bill is interesting, but it is small.”

OCU estimates that an average household with heating and moderate consumption of approximately 9,000 kwh per year, with a cheaper rate could save as much as 227 euros per year. This works out to savings of around 18.90 euros per month.

For households getting their gas on the regulated market, savings would be roughly half of that amount at 103 euros per year, with monthly savings of 8.60 euros per month.

It is worth being mindful that VAT has not been cut on propane or butane gas, something that many Spanish households rely on, this will remain at 21 percent.

The Spanish government did, however, freeze the price of bottles of butane in May and they will stay at 19.55 euros until at least the end of this year.

Inflation in Spain has remained in double digits since June, a level that hasn’t been seen since the mid-80’s. The inflation rate dropped for the first time in four months in August, hitting 10.4 percent.

With many people experiencing hardships over the last few months, the Spanish government has been handing out aid packages to help businesses and households who are struggling through these hard times. Free commuter train travel and fuel subsidies are just a couple of the measures that have come into force.

Sources

https://www.thelocal.es/20220901/spanish-government-to-reduce-vat-on-gas-from-october/
https://www.surinenglish.com/spain/gas-bill-tax-slashed-20220901104513-nt.html
https://www.thelocal.es/20220902/how-much-will-spains-gas-vat-cut-save-me-per-month/

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