Direct | Government extends social shields and expands housing relief measures

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The Council of Ministers approved a package of measures designed to ease the financial burden on citizens facing the war in Ukraine and the renewed conflict in the Gaza region. A notable element sees the President of the Government, Pedro Sánchez, confirming the removal of commissions for cash withdrawals at the counter for seniors and those with disabilities. This proposal originated from First Vice President and Minister of Economy, Trade and Enterprise Nadia Calviño during a meeting with financial users and representatives of the Bank of Spain held a week earlier. Sánchez also announced that taxes on banks and energy companies will be extended for a year, with the energy tax accompanied by a set of decarbonization related cuts.

The elimination of counter cash withdrawal commissions aligns with the protocol signed in February 2022 to ensure broad financial participation by different groups. Since then, customer service hours have improved, with working hours extended at 82.2% of branches. Nearly all ATMs have been adapted, and financial education programs have reached approximately 300,000 senior individuals in the first half of this year. The minister noted at that time that quarterly monitoring and clear communication of progress would continue to drive further enhancements.

Another approved policy removes all early repayment commissions on variable-rate housing loans and promotes a transition to fixed-rate loans. It also expands options for free conversions from variable to mixed rates. Mortgage relief measures include freezing interest for 12 months, extending the loan term by up to seven years, and a two-year grace period for families with incomes below €25,200, which corresponds to three times the basic public income benchmark. IPREM, the Very Effective Public Income Indicator, is referenced in these provisions. Government projections indicate that around 116,000 families will benefit from these aids, representing roughly a 21% increase over Bank of Spain figures estimated in the spring for mortgage holders.

Direct | Pedro Sánchez signals decree extending social shields

The Council of Ministers also approved extending temporary taxes on banks and energy companies for at least another year. While the banking tax remains unchanged, adjustments are planned for the energy company levy in the coming year. In particular, from January 1, there will be cutback measures for decarbonization related projects and a commitment to review a tax amount that will become permanent. The banking tax continues to apply at a rate of 4.8% on the interest and commissions charged by banking institutions that reported invoicing over €800 million in 2019. The rate will be determined in 2023 and 2024 based on revenues from 2022. The measure is designed to apply only to activity within Spain and to reflect the overall fiscal framework for 2023. Total revenue from these taxes reached €2.908 billion in 2023, just short of the government’s forecast by a small margin, demonstrating their ongoing impact on the fiscal landscape.

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