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Date Published: 27/12/2023

Spanish government implements new anti-crisis measures focusing on energy and transport prices

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Gas and electricity in Spain are both set to become more expensive next year while price cuts on groceries remain in place for the time being

Spanish government implements new anti-crisis measures focusing on energy and transport prices

The war in Ukraine is still having an impact on our pockets and with this in mind, the Spanish government will implement a new battery of measures on Wednesday December 27 aimed at relieving some of the financial pressure for the average household.

While the bulk of the measures currently in place, such as discounted transport, will be extended into the new year, the government will also be forced to cut some aid under pressure from Europe.

There’s both good and bad news for families; unfortunately, gas and electricity are set to become more expensive throughout 2024 but the VAT cuts on food prices, which automatically make many staple kitchen ingredients much cheaper, will remain in place for another six months or so.

Here’s a round-up of the main crisis measures:

Gas and electric

From January 1, the VAT on electricity tariffs will increase from the current super reduced rate of 5% up to 10%, where it will remain for the rest of the year.

Gas, which is currently also taxed at 5%, will be gradually increased to 10% between January and March before returning to its normal VAT rate of 21% by the end of 2024. Given the current cold snap, the government has tried to hold off on any large price hikes until the winter is over.

In addition, the Government has extended throughout 2024 the prohibition on cutting off electricity and gas supplies and the limitation on increases in the price of the regulated gas tariff (TUR) and the butane cylinder.

Groceries

The current 0% VAT on staple food items and the maximum 5% tax on olive oil and pasta will remain in place until June 2024, but the government hasn’t indicated what will happen after this date.

Likewise, the additional benefits afforded to vulnerable households in relation to social bonds will continue until June.

Taxes for banks and energy companies

Last year, two new levies were introduced to ensure banks and large energy companies contributed part of their ‘extraordinary profits’.

The new anti-crisis decree keeps the banking tax unchanged. This means that in 2024, the interest and commissions of all financial entities that invoiced more than 800 million in 2019 will continue to be taxed at 4.8%.

What does change is the tax on energy companies. President Sánchez has announced a reduction in 2024 in a tax of 1.2% on the amount of the turnover of companies that invoiced more than 1,000 million in 2019.

Jobs and housing

Throughout next year, companies won’t be allowed to cite energy cost increases as a reason for laying off staff. Furthermore, landlords will not be allowed to evict tenants considered to be in vulnerable situations.

Public transport

All of the discounts and bonuses on public transport which have been in place throughout 2023 will remain in place next year.

In other news: Spanish baggage handler strikes back on: flights, dates and airports affected

Image: Freepik

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