Spanish government finalises anti-crisis plan with energy bill rebates under the spotlight

The coalition government in Spain is set to partially extend Spain's anti-crisis plan, due to expire on 31 December, and which was implemented to combat the impact of inflation and the energy crisis following the Ukraine war.

The new proposals will be put to the Cabinet on Wednesday 27 December. According to sources, there is a possibility some subsidies could be withdrawn, especially those that have a higher cost on the state, such as the tax rebate on electricity bills.

Currently, Spanish households continue to benefit from a 5% IVA (Spain's sales tax) cut on their electricity and gas bills. In addition, at least until 31 December, the special tax on electricity is also reduced to 0.5% and the tax on the price of electricity production is suspended. The Bank of Spain warned a few days ago that extending the IVA rebate would have an impact of around three billion a year on the public coffers. But, these measures have also contributed to a moderation in inflation. With prices much lower than a year ago, the government plans to eliminate the so-called Iberian exception with which Spain and Portugal have managed to cap maximum gas prices this year.

Food and transport

The Ministry of Economy also confirmed that the Cabinet will tomorrow extend the scrapping of 4% IVA on staple foods such as bread, flour, milk, until June 2024, as well as the reduction from 10% to 5% for oil and pasta. The reduction in IVA on fish and meat will not be included.

According to sources, free public transport for young people and the unemployed will also be approved, as already confirmed by Prime Minister Pedro Sánchez. It still leaves the question unanswered about what will happen with the reduction in the price of public transport season tickets, until now reduced to 30%, provided that the regions that manage this service contribute by increasing the discount to 50%.