Discounts on transportation, VAT on electricity and gas and taxes on banks and energy companies: keys to the anti-crisis decree that is approved today

The Government will approve this Wednesday the new decree to alleviate the economic and social consequences of the war in Ukraine. He will do it on the horn, since the current one expires on December 31. In fact, PSOE and Sumar are still negotiating the package at this time, in which it is expected that the bulk of the measures that have been applied until now will be extended, such as discounts on transport or the prohibition of evictions of vulnerable families without alternative. On the contrary, the withdrawal of some of the proposals that cost the public coffers the most is expected, since Europe has already begun to ask for spending restraint.

As usual, the Executive is keeping its cards with the utmost discretion. In all likelihood, it will be President Pedro Sánchez who will present the new decree this Wednesday, after the Council of Ministers has held. It is a situation similar to what occurred last year, when he announced the package of measures at the same time that he made an annual assessment of his Government's actions.. Then, the head of the Executive and the leader of Sumar, Yolanda Díaz, closed the last threads with a meeting in Moncloa -with a photo included-, since it was not until these last few days that the negotiations have intensified. In this sense, throughout this Tuesday, the vice presidencies have been exchanging documents and proposals.

Unlike 2023, Podemos is no longer part of the Council of Ministers and it is the first large-scale decree of the new PSOE and Sumar Government since the investiture was held in mid-November.. In the speech that the president gave then, Sánchez anticipated that free public transport for young people and the unemployed would be extended from January 1. In addition, he also pointed out that the VAT reduction would be extended to 4% for basic foodstuffs and the reduction from 10% to 5% for oil and pasta.

According to what Sumar sources have told Europa Press, those from Díaz have managed to extend the rule that states that companies that fire workers alleging causes such as the rise in energy costs will be obliged to return the aid they have received from the State.. This idea was included in the proposals that Sumar made public last Monday, as an exercise of pressure on the socialists and in which, basically, they asked to maintain the vast majority of the aid that expires on December 31. The main of the new measures that Sumar claimed to include in the decree was the automatic extension of all rental contracts that expire in the next six months, a rule that was in force until last June and that the PSOE said was “above table”.

It is the same answer that was given weeks ago when asked about another of the measures included in the package and that, finally, will be included: the one that prohibits the evictions of vulnerable families without a housing alternative.. This point is included in the housing law approved in the last legislature, although the mechanisms still need to be developed to, as stated in the articles, “provide response and support, in coordination with social services and third sector entities, to people and families with fewer resources, avoiding evictions in vulnerable situations”. That is why the Government has agreed to include it and has left its 'sale' to EH Bildu, which has claimed victory.

The package that will be approved this Wednesday will be the eighth since the conflict began in Ukraine and the cost to the public coffers already amounts to 47 billion euros. Furthermore, Europe has already begun to call for spending restraint, so some measures will either be cut or eliminated. In fact, the Treasury has already been preparing the ground for the withdrawal of some. “The EU has been advising to withdraw stimulus measures,” recalled the fourth vice president, María Jesús Montero, at the end of last week. On the wire are the reductions in the special tax on electricity and VAT. However, the intention of the PSOE is to “squeeze the fiscal margin to the last euro.”

Free and discounted transportation

Regarding measures related to transportation, public or private, it is expected that this Wednesday's decree confirms the announcements that Sánchez already made during his inauguration session that as of January 1, public transportation will be free for those over 65 years and unemployed. However, communities like Madrid are still waiting for some concrete conclusion regarding the reduction in the price of transport passes for the rest of the population, to which the Government contributes 30% and regional governments such as Madrid, with another 30%. Also up in the air is the availability of free passes for medium-distance trains.

In private transport, nine months after the entry into force of the discount of 20 cents per liter of gasoline or diesel for all drivers, there is only a reduction of 5 cents per liter from which only professional transporters and the agricultural sector. Extending this aid, already very residual, is another of the decisions that have to be made this Wednesday, in a context in which fuel prices are below what they were before the war in Ukraine began.

Measures on the price of electricity

In the field of energy, one of the big unknowns is whether the Government will extend the cap of 67 euros/Mwh that has existed since 2021 for electricity contracts and that in 2022, in the midst of the energy crisis, it extended to consumers with fixed contracts. a rule by which electricity companies that sign new supply contracts to consumers or renew them will not be able to set a price that exceeds 67 euros. The difference with the real cost is assumed by the electricity companies, reducing their profits.

This reduction of 67 euros was a way to limit the excessive profits of the electricity companies and, like the Iberian mechanism, it will also decline on December 31 if there is no decision by the Government to extend it. Although against this limit and pointing out that it is the strictest of those applied in other EU countries, the sector is considering that perhaps the Government will decide to maintain it next year.. Something that will not happen with the other limit on the price of electricity, the one set by the Iberian mechanism that will not extend beyond the end of the year after Brussels rejected such a possibility.

With regard to the super-reduced VAT on gas and electricity, everything indicates that the Government will opt for an intermediate solution between maintaining the super-reduced rate of 5% or returning it to the 21% before the energy crisis.. The first possibility has been losing steam with the stabilization of electricity prices and the other would mean a sudden increase in the electricity bill that is difficult to assume when inflation is still much higher than usual, so it appears to be possible. the option to raise it progressively.

It also remains to be seen what decision the Government makes regarding other tax cuts to alleviate the cost of energy for homes: the reduction of VAT to 5% also for pellets and wood, the reduction to the minimum allowed of the Special Tax on Electricity, which is currently taxed at 0.5%, as well as the suspension of the tax on the value of the production of electrical energy. All of these measures will also expire on December 31 if the Government does not decide otherwise in this Wednesday's decree.

Something that does not exactly end with the end of the year but on which there could also be modifications are the new taxes on banks and energy companies that were created last year, also to limit excessive profits due to energy prices and rise in interest rates. The EU agreed to a general framework for what it called a “solidarity contribution” – at least 33% of the profits of these companies – but left room for each government to adopt equivalent measures.. This is what eight countries did, including Spain, which according to a report from the European Commission is the country with the most particularities in the application of a new rate that in principle was only for energy companies. On the one hand, the Government decided to also extend it to banking. Furthermore, the Spanish tax is the only one that taxes -at 1.2%- the net turnover of companies.. Only like Belgium, Portugal and Hungary, it chose to apply it in the 2022 and 2023 fiscal years.

In this way, next year the tax accrued in 2023 will still be collected but the decision remains whether to maintain it, reduce it or modify it in 2024, on which it will depend whether income is collected for this concept in 2025.. A few weeks ago, at COP28, the third vice president, Teresa Ribera, opened up to reviewing it, taking into account that the drop in energy prices has also evaporated the “extraordinary profits” of companies in this sector. The possibility of linking it to investment in renewable energies to promote the energy transition was even suggested.