Spain’s electricity and gas customers hope for tax cut extension

VAT CUTS on electricity and gas bills introduced in the wake of wholesale energy price hikes are due to end on December 31, but the PSOE’s junior coalition partner- Sumar- has proposed an extension.

Sumar’s economic spokesman, Carlos Martin, confirmed on Monday that his party wants to keep the tax cut going for domestic customers but with changes for businesses.

In October 2022, Prime Minister, Pedro Sanchez, announced the slashing of VAT on bills from 10% to 5% as part of a royal decree to deal with the consequences of the war in Ukraine.

A year earlier, the government cut the VAT rate from 21% to 10% as wholesale electricity prices shot up to what were then record levels.

At a news conference, Carlos Martin, said that Sumar had sent the PSOE a report with proposals for anti-inflation measures that he hopes will be approved.

Among Sumar’s demands are some measures that the Government has already announced will be extended, such as the reduction of VAT for basic foodstuffs and subsidies for public transport.

Sumar has added the extension of the VAT rebate for electricity and gas and the cap on the gas tariff of last resort, as well as a partial recovery of the excise duty on electricity, which would remain at 0.5% for households but rise to 5.5% for companies- up from 5.1% before the reduction.

They also propose maintaining the extraordinary taxes on banks and energy companies, initially planned for only two years, and that non-contributory pensions and the minimum living income be raised by 7%.

In terms of housing, Martín has proposed extending the ban on evictions, setting a cap on rent increases of 3%, thus making the portability of mortgages mandatory.

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