Bank of Spain criticizes 20 cent cut for benefiting higher incomes more

The government included a direct discount of 20 cents per liter of fuel for all consumers in the macro decree of the measures taken against the effects of the war. A measure that the Manager prefers to generalize to all customers, with indiscriminate final price reductions, for immediate implementation, to cushion the blow on drivers—individuals and professionals—at the full escalation of fuel prices.

In recent weeks, the government has pointed to the possibility of removing the discount, which came into effect on April 1 and will be effective until June 30, or make changes if it is found to be ineffective. Now the Bank of Spain criticizes such indiscriminate support measures, betting that aid is directed to the most vulnerable or most affected, warning: The 20-cent deduction benefits higher-income households more.

“The need to respond quickly to the agents most affected is met by the fuel price subsidy, but this is a very general measure and may have a regressive character given that low-income households are likely to consume less of these products,” warns Bank of Spain inside that 2021 Annual Report.

The body, commanded by Governor Pablo Hernández de Cos, warns that “perhaps it would have been more preferable”. use of income-based transfers” and not all drivers receive a fuel discount. “The desirability of the selective nature of the measures is a excess demand this aggravates bottlenecks and really fuels the inflationary process”.

Preliminary estimates, handled by the Bank of Spain, show that the 20 cents per liter reduction has resulted in lower inflation for high-income households. 0.61 percent points Between April and June, this reduction in the weight of inflation for low-income households will be 0.35 percentage points. “Measures to support households and businesses in the face of energy price shocks should be temporary, allow rapid implementation and be targeted. agents who really need them”, punishing the Bank of Spain.

The government is open to changes

He argued from the government that at a time of extreme price crisis, the only way to quickly implement the fuel discount for all users is to launch it. But Teresa Ribera, vice president and minister for Ecological Transition, even opened the door to transforming this into a discount that would then be distributed according to consumer income in the event of the energy crisis and high prices. gasoline Y diesel oil gets longer and support for drivers needs to be expanded.

“If we have to maintain the support system for automotive fuel consumers, what is fair and reasonable is to try to focus on which families are which. income levels They deserve more support. We need to look for a card-like system to intensify the financial effort to help these families,” Ribera explained a few weeks ago.

The government incurs a cost of 20 cents per liter of fuel sold during these three months and is expected to have an impact of 1,423 million euros on the public budget. Oil companies with the largest gas station networks (Repsol, Cepsa, BP, Galp, Shell and DISA) they have expanded these discounts to 25 to 30 cents per liter, depending on whether customers are owned by their company. loyalty programs or use companies’ own payment methods.

The general distribution of the discount of 20 cents per liter for all customers and for all refueling, regardless of the consumer’s income level and vehicle usage intensity, has been criticized as being regressive: being general, provides more benefits to higher incomes. Nadia Calviño, Vice President and Minister of Economic Affairs, predicted that the Executive would review the effectiveness of all support measures approved in the war macro decree, and those that were not effective would be eliminated or replaced.

Calviño has already gone further, threatening to end the discount of 20 cents per liter of fuel if some oil companies are found to be driving fuel prices even higher. suck the discount and practically cancel. “If we see that certain measures are causing prices to be maintained because operators are receiving assistance, we will not continue this assistance.” The government warns that “very close monitoring” of the operation of the fuel market is being carried out to ensure that the possible behavior of companies does not hinder the effectiveness of measures taken to contain price escalation.

Source: Informacion


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