The Government plans to approve a royal decree-law on Wednesday to extend some of the measures that expire on December 31 and with which the economic consequences of the war in Ukraine and the rise in prices are addressed. Among these measures are the reduction of IVA on basic foods.
The new package, which will be approved in the last Council of Ministers of the year, will be the eighth promoted by the Executive to continue responding to the impact of the war in Ukraine and the increase in prices, a mobilisation of resources that, until now, amounts to about 47 billion euro.
In this next package of measures, the suppression of the 4% IVA that applies to all basic foodstuffs and the reduction from 10% to 5% of oil and pasta will be maintained for six more months, according to the president, Pedro Sánchez.
Among the basic foods that see the tax eliminated, common bread stands out; breadmaking flours; natural, certified, pasteurised, concentrated, skimmed, sterilised, UHT, evaporated and powdered milk produced by any animal species; cheeses; eggs and fruits, vegetables, legumes, tubers and cereals that have the status of natural products in accordance with the Food Code.
According to the latest data published by the Tax Agency, these tax reductions have meant a loss of 1,5 billion euro for public coffers between January and November of this year. However, the introduction of a wealth tax, that affects just 0.01% of the population, the richest, was set to bring in 1.8 billion euro.
But this may not be the only tax reduction that the Executive considers extending. It is not yet clear whether the IVA rate reductions to 5% on electricity and gas, wood and pellets will be extended beyond December 31, taking into account that this tax measure has had a revenue impact of 728 million euro.
Another unknown is the decision that the Government will make regarding the reduction in the price of public transport passes and multi-trip tickets. The Executive will have to decide whether to continue offering a 30% discount on public transport for the rest of the administrations, as long as they commit to increasing this discount to 50%. The only thing that Sánchez has advanced on this matter is that public transport will be free for minors, young people and the unemployed, although it has not been clarified when this measure will be in force.
There are also currently in force, until December 31, labour measures linked to the enjoyment of public aid that it is unknown if they will be extended. Specifically, it is the decision that the increase in energy costs cannot constitute an objective cause for dismissal. Failure to comply with this obligation entails the refund of the aid received.
Likewise, until the last day of the year, the maximum price of a butane cylinder between 8 and 20 kilograms is limited to 19.55 euro, although this rate was last reached in the review of September 19, 2022.
One of the measures that has had the greatest effect in recent months to address the increase in prices, mainly energy, is the ‘Iberian’ mechanism, which has allowed Spain and Portugal to decouple the evolution of the price of electricity from the price of gas.
However, the third vice president of the Government and minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera, has assumed that it will decline on December 31, after pointing out that the European Commission considers that it is not “possible to put it into practice.”
Sources from the ministry assume that the measure will expire when it expires at the end of December, after pointing out that Spain was already expecting that the extension negotiated with Brussels before the summer would be the last, taking into account that the instrument has not had any effect on the processes of marginal matching in wholesale markets since the end of February.
The so-called ‘Iberian exception’ was approved in June 2022 and was extended until the end of 2023 after the agreement reached by Spain and Portugal with the European Commission that extended the measure by seven months.
The post Spanish Government set to extend household saving plan appeared first on Spain Today – Breaking Spanish News, Sport, and Information.
