The Government of Spain abolishes the VAT of 4% of basic foods and reduces to 5% that of oil and pasta

Euskaraz irakurri: Sanchezek BEZa kendu die “premia handiko produktuei”, eta erdira jaitsi du olio eta pastarena

The President of the Government of Spain, Pedro Sanchez, has presented this Tuesday the third package of measures to deal with the economic and social consequences of the war in Ukraine and the rise in inflation. The measures will come into force on January 1.

As Sánchez announced at a press conference after the meeting of the last Council of Ministers, VAT of 4% is suppressed for six months which applies to all staple foodsincluding bread, milk, bread-making flour, cheese, eggs, fruit, vegetables, legumes, potatoes and cereals, and reduction from 10% to 5% of oil and pasta.

The Executive of Spain has also approved direct aid for an amount of 300 million euros to farmers in compensation for the increase in the price of fertilizers.

In addition, consider a 200 euro check for incomes of less than 27,000 euros per year and with assets of no more than 75,000, which will benefit some 4.2 million households. The Government of Spain will maintain the 15% increase in the IMV in 2023 also received by families with lower incomes. This rise was established in April 2022 and was scheduled to end this December.

The Council of Ministers has also established a six-month extension for the rental contracts that end before June 30, 2023. In addition, it has extended until December 31, 2023 the 2% limitation on the annual review of rents for contracts in force and the suspension of evictions and uprisings for vulnerable families.

Also, it has been agreed reduction of public transportby which the Government of Spain will give direct aid to the autonomous communities and local entities to reduce the urban and interurban subscription by at least 50%. Cercanías and rodalíes will be free in 2023, and also the public road transport service.

On the other hand, the Council of Ministers has agreed extend the reduction in taxes on electricity and gas for six monthsas well as freeze the maximum price of the butane cylinderand has extended until December 31, 2023 the prohibition of cutting off essential supplies and the extension of the social bonus.

Withdraw the widespread fuel subsidy

The Government of Spain has eliminated the general fuel discount for the year 2023 and has decided to maintain it only for the group of professionalswhich includes carriers, farmers, shipping companies and fishermen, so the 20-cent discount will disappear on January 1 for private customers.

The extension of the discount of 20 cents per liter for professional road transport will be paid at the end of each month. For farmers, the direct aid for the aforementioned amount will be applied through the refund of the special hydrocarbons tax. It has a cost of 240 million euros.

Sánchez has indicated that the evolution in recent weeks of fuel prices has been favourable, which explains why it has not been extended for individuals, but has defended that the discount has had an “undoubted positive effect on millions of workers”.

€45 billion

The Council of Ministers has also approved this Tuesday 950 million euros for aid and to provide liquidity to the gas intensive companiesstrongly affected by the rise in gas prices derived from the war in Ukraine.

Likewise, in its royal decree on response measures to the economic and social consequences of the war in Ukraine, the Government of Spain extend the relief contract in the manufacturing industry until December 31, 2023.

In total, Sánchez has estimated the total cost of the measures included in his shock plan to deal with the energy crisis and the high inflation caused by the Russian invasion of Ukraine at 45 billion euros.

This is how Sánchez explained it at the press conference after the extraordinary Council of Ministers that this Tuesday gave the green light to the third package of measures, at a cost of more than 10,000 million euros, in addition to the 35,000 million of the two previous decrees.