The Spanish government is set to reduce VAT on gas from 21 percent to 5 percent in order to help reduce energy bills heading into the more energy-intensive winter months.
The measure was announced by Prime Minister Pedro Sánchez, and will come into force from October and last until December, although it could be extended into the new year.
“The government of Spain is proposing a reduction in VAT on gas from 21 to five percent,” Sánchez told Cadena SER in a radio interview, adding that the cut “is in line with the economic policy” of his government, something he describes as “selective tax reductions for the benefit of the working middle class.”
“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,” Sánchez said, adding that although the measure is slated for three months, “we will be open to extending it over the next year as long as this very difficult situation lasts.”
Sánchez reiterated, as he has previously, that the government “does not contemplate” restrictions on supplies of of gas this winter, despite the fact that “the context is very uncertain.” Spain, he said, has “a much more comfortable and safer situation” than other European countries more dependent on Russian gas imports.
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When pressed on how much money taxpayers will save as a result of the cut, Sánchez was evasive with figures but assured Spaniards that the cuts would be paid for by taxes on banks and the profits of energy companies.
Cutting VAT on gas to 5 percent was originally a proposal made by the opposition Partido Popular, and it is believed new party leader Alberto Núñez Feijóo was set to request it in the Spanish Congress next week.
Spain’s inflation rate hit 10.4 percent in August, down from for the first time in four months as fuel prices eased, but it remained high due to rising electricity and fuel prices.
Inflation has remained in double digits in the eurozone country since June, a level not seen since the mid-1980s.
Economy Minister Nadia Calvino said consumer prices were on a “downward slope” that will continue “over the course of the next months.”
Sánchez’s leftist government has rolled out aid packages in recent months to help households and businesses weather the inflationary pressure, including free commuter train travel and fuel subsidies.