Spain cut its fuel subsidy on Friday, reducing the discount on the Special Hydrocarbon Tax from 15 to 10 cents per litre for both petrol and diesel, effective August 1.
The measure is part of a package the government approved to offset the energy price impact of the war between Israel and Iran.
The reduction falls at the start of one of the busiest travel periods of the year. The Spanish Confederation of Service Station Entrepreneurs (CEEES) said the tax increase, combined with the VAT applied on top of it, would push pump prices up by more than six cents per litre. The group had asked the government to extend the discount until the end of summer to avoid eroding purchasing power during the holiday season and to protect the tourism sector’s competitiveness.
Gradual phase-out
The government has set a phased withdrawal schedule. After the 15-cent discount in July, the rebate falls to 10 cents in August and is due to drop to five cents per litre from September, unless fuel prices spike again.
The decree includes a safeguard clause: if the consumer price index for petrol or diesel shows a year-on-year rise above 15 percent, the government may hold the subsidy at a higher level. Spain’s National Statistics Institute will publish July price data on August 13, which will determine whether the September figure is revised.
The subsidy cut follows the government’s decision at the end of June to scrap a reduced 10 percent VAT rate on fuels, in line with European Commission recommendations to wind down extraordinary aid.
CEEES said service stations had applied the tax cuts with full transparency throughout the period, a claim it said had been backed by both the National Markets and Competition Commission and the government.
Professional road transport retains its extraordinary aid until September 30, covering carriers with partial fuel tax refund rights, self-employed drivers, companies with transport licences and urban bus operators.
