The Council of Ministers approves Gradually increase energy taxes until they reach pre-crisis levels energy crisis: So, they agreed to increase the raises. VAT on electricity increased from the current 5% to 10% Throughout 2024; Special Electricity Tax (IEE) will increase from the current 0.5% to 2.5% in the first quarter of the year and to 3.8% in the second quarter; Electric Energy Production Value Tax (IVPEE) will be 3.5% until March and 5.25% until June. In case of supply VAT on natural gas will be 10 percent in the first three months 2024.
This is what Head of Government Pedro Sánchez put forward at the post-Cabinet press conference on the eighth aid package to confront the economic effects of the war in Ukraine. Europe’s mandate includes the removal of fiscal measures adopted to offset the effects of the energy crisis, but the Executive Avoid causing a new increase in prices In the midst of inflation. And to do this, the Government will use a huge ‘electric piggy bank’ worth over €6 billion, as well as “specific items included in the next General State Budget”, according to the Ministry of Ecological Transition.
Protection of the defenseless
Despite the reversal of the tax cuts, the Executive will continue the tax cuts. most precautions started with energy crisislike help most vulnerable consumers such as the ban on power outages created with the pandemic or the expansion of electricity and thermal social bonus discounts. –with three categories of vulnerable consumers receiving social electricity bonuses and discounts of 40%, 65% and 80%- or continued power outages fixed part of the electricity bill unchanged, charges were reduced to 55% below pre-war levels, as before.
Also, the limit of growth regulated gas rate Special TOUR and discounts for (TUR) and neighborhood communities 80% of electricity-intensive companies’ tolls. This includes other previously announced measures. an extension of the VAT reduction on food until June, as well as a transport bonus for young people, the unemployed and pensioners, or a free switch from variable to fixed mortgages. These include public assistance at work or the suspension of evacuations of vulnerable people, as Sumar sources confirm.
Other measures
The government took advantage of the new decree New measures regarding the promotion energy transitionSuch as the inclusion of “uneconomic tender criteria with a maximum weight of 30%” in the next renewable energy auctions, in line with the European Wind Energy Package, in order to try to increase European production against imports from third countries.
It also changed the administrative processing times that new renewable energy projects must comply with, setting a deadline of six more months, up to 49 months, and no later than 49 months to obtain the Administrative Permit for the Construction of the project. Extending the period for obtaining Administrative Abuse Permit from five years to a maximum of eight years. Reservation of 10% of the capacity of electricity transmission network nodes to guarantee the evacuation of surpluses from self-consumption facilities.
different scenario
Thus, the Council of Ministers is adapting measures to return to the pre-crisis situation after the crisis. electricity price during the first It became 58% in the six months of 2023 A similar situation for gas, which is lower than the European average and the cheapest in the last 13 years, according to Eurostat.
According to the National Institute of Statistics (INE), electricity prices in November were 13.6% lower than in 2022, and natural gas prices were 19.7% lower than a year ago. This reduction in prices, good or bad, is due to the new decree that the Council of Ministers will approve this Wednesday. Controlling financial expenditures on electricity and gas because in both cases tax base place where tax will be calculated less than now compared to the last two years.
up to 3.5 billion
tax cancellation –VAT, special tax and production tax– will have a positive impact on electricity of approx. 3.1 billion euros in 2024In any case, VAT on gas will be added at the rate of approximately 1,000 million 394 million. In total, recovery of the original taxation on energy, 3.5 billion (for a full year), as can be seen from the estimates that the Ministry of Finance itself included in the last State Budget Rebalancing Plan.
On the other hand, refund of original tax It will inevitably come with a development in energy. increase in inflation. INE calculated that the tax cuts served to reduce inflation by three tenths in 2022 and a further three tenths from 2023 (by November). Removing tax cuts could have a similar magnitude of upward impact on inflation going forward.
gradual sales
The first measure announced to alleviate the impact of the increase in electricity prices in the spring of 2021, when Russia began to put pressure on the natural gas tap, was the VAT reduction on electricity, but no one had yet predicted that this price increase would end the crisis. a few months later in the invasion of Ukraine. In June of the same year, electricity prices on the wholesale market rose to 83 euros, compared to an average of 65 euros in the previous two months, and the Council of Ministers agreed to reduce and suspend VAT from 21% to 10%. The 7% tax collected from electricity production goes to companies and they are transferred to the invoice.
However, the price increase did not stop. That summer electricity reached triple digits and the Government introduced new measures. These include reducing the special tax on electricity from 5.11 percent to 0.5 percent (the minimum possible) or cutting excess revenue from hydro and nuclear power plants, controlling the rates companies offer to customers in fixed-price contracts and ensuring that companies comply with these rates. It includes compliance. We expect it to continue next year. Following the start of the war in Ukraine, in March 2022, prices increased ten times the pre-crisis average – electricity reached a maximum of 544.98 euros on 8 March, and gas rose to 214.36 euros on 7 March. The Government will decide on a new reduction in VAT on electricity to a minimum of 5% in June 2022, creating what the Government calls the ‘Iberian exception’. prevent contamination The ratio of the price of this raw material to the price of electricity in Spain and Portugal.
In the autumn of 2022, after new records were set at the end of August and fears of an increase in heating bills looming in the winter, the minimum 5% VAT rate was extended to the gas bill and a subsidy was also applied to the regulated tariff (TUR). for neighborhood communities. In this latest case, companies have asked customers to change rates due to the bonus expiring, suggesting it could suffer the same fate as other key measures designed to limit the impact of the energy crisis on customers’ pockets. and its impact on inflation, such as the bonus of 20 cents per liter of fuel, which generally ends in December 2022 and for transport ends on 31 December.
The other star size is VAT reduction on foodIt was stated that the period announced by the Head of Government will be extended for another six months.