Friday, October 7

The Government will lower the VAT on gas to 5% due to the lack of control of prices

The President of the Government, Pedro Sánchez. / EP

Pedro Sánchez assumes that saving measures are proposed after the summer although he rules out generalized cuts

Jose Maria Waiter

The President of the Government, Pedro Sánchez, has announced that he will lower the VAT on the gas bill from the current 21% to 5% at least until the end of the year in view of the evolution of gas prices in international markets, which have set a record in full August, an exceptional situation.

Sánchez made the announcement in an interview on Cadena Ser five days after the debate he was going to hold with the president of the PP, Alberto Núñez Feijoo, in an energy face-to-face meeting in the Senate on account of the latest energy saving plan. the reduction of VAT was precisely one of the proposals listed by the popular this week ahead of that parliamentary meeting.

The evolution of the price, which has exceeded 300 euros/mwh this August, and above all the unflattering prospects for the coming months, has led the Executive to make this decision at the gates of a winter in which gas bills may suffer a dangerous ascent. Russia’s decision to cut the gas pipelines with Germany or Pharmacy, among other things, has revolutionized the gas market which, at the same time, has boosted the electricity bill by using this raw material to produce electricity through power plants. combined cycles.

This gas VAT reduction joins the reduction of that same tax that the government has already cut in the case of the electricity bill since spring from ten to 5%. It is the minimum tax allowed by the European Commission.

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In the case of the bill with regulated gas rates, the so-called TUR, price increases have been restricted since November of last year. In each quarterly revision of this rate, the executive maintains the discount, although at the same time he incorporates the compensation for not having raised the receipt as much as he should have done due to the evolution of the market.

Despite the different measures taken by the Government in the last year to try to contain electricity and gas bills, reality has overturned a large part of the effects of these plans. In addition to the VAT reductions on the electricity bill, the executive has also reduced the special electricity tax to 0.5%, as well as numerous fixed charges that are usually included in the bills paid by citizens. In addition, the Iberian mechanism that allows limiting the price of gas to form the cost of daily electricity in Spain has been in force since June 15. The President of the Government has assured that although these prices have risen this summer, the increase would have been up to 15% higher compared to the rest of Europe if the Iberian cap had not been applied.

August has become the most expensive month in history for electricity bills, especially those linked to the regulated rate or pvpc. The increase in the price of gas on the international market due to pressure from Russia and the need to supply reserves by all European countries has raised the average cost of generation to over 300 euros per megawatt hour. This is a reference to a higher than that recorded in March, just the month after the start of the Russian invasion of Ukraine.

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