Sánchez begins to withdraw aid with the increase in VAT on electricity and 'forgets' about free transportation for the unemployed and minors

Yesterday the Government approved the ninth package of measures to alleviate the economic effects of the war in Ukraine, an economic response that until now – and without taking into account the new decree – totals more than 47,000 million euros. That is why, once inflation was controlled, the Executive has begun to withdraw aid, since it is also something requested by the European Union. In this case, electricity will become more expensive because the VAT on electricity and gas will begin to rise from the current super-reduced rate and will end the year, in the case of gas, at 21%.. Furthermore, a commitment that President Pedro Sánchez launched in his investiture speech regarding free public transport for minors and the unemployed has not finally been included and which would entail a large public expense, since it has been decided to maintain free public transport for travelers. usual and to continue offering discounts of up to 50% on regional and municipal transportation.

The socialist wing of the Executive, led by the Minister of Finance and deputy secretary of the PSOE, María Jesús Montero, was in favor of spending less money. Or at least that's how he had let it slip in his last public interventions. “The European Union has been advising to withdraw stimulus measures,” he noted less than two weeks ago. However, Sumar, the other leg of the coalition, opted to, if withdrawing some aid, do so gradually to avoid economic shocks.. They even claimed that a sharp cut could cause a drop in growth of between one point and one and a half points of GDP, that is, approximately 10,000 or 15,000 million euros.

Finally, the theses of the second vice president Yolanda Díaz have been imposed and the decree states that, as of January 1, the VAT on electricity will go from 5% to the reduced rate of 10%, at which it will remain throughout 2024. In the case of VAT on gas, it will go from the current 5 to 10% between January and March and from April it will return to the 21% rate it had before the energy crisis.. Sánchez defined it as a “gradual increase” in tax rates that, in the case of gas VAT, “will recover normal values” once “the winter stage” is over.

In the case of VAT for basic foods – bread, flour, milk, cheese, eggs, fruits, vegetables, legumes, potatoes and cereals – it will remain at 0% until June and, for pasta and oils, at 5%. There is no news regarding the PP's proposal to also reduce the VAT on meat, fish and preserved foods to 5%, despite the fact that 'popular' sources assure that Sánchez assured Alberto Núñez Feijóo, president of the PP, last week I would study it.

In the case of transport, the Government has chosen to maintain generalized aid instead of selected by income or employment status.. Thus, the state discount for transport passes that must be combined with another regional pass is extended throughout the year so that the reduction is at least 50% of its amount, as well as the discount for Avant trains and the free Cercanías, Rodalíes and Media Distancia trains for “frequent users”.

However, the announcement made by the president in his inauguration speech, a little less than a month and a half ago, in which he promised that transportation would be free for minors and unemployed people, has been left out.. Sources from the Ministry of Transport defend that the Government “has been more ambitious and has made a greater effort”, because public transport under state jurisdiction “is not only free for the unemployed and for young people, but for everyone, without limiting it to groups “. Furthermore, they maintain that subsidies for regional and municipal transport will be maintained if the competent authorities complete the 30% discount provided by the Executive up to 50%.

However, the president wanted to highlight the importance of the “fiscal consolidation” that the Government is carrying out.. He pointed out that the public deficit will be 3% of GDP next year – when in 2021, he assured, it was 10% – and the debt will be reduced to 106% of GDP. “For a progressive government, fiscal consolidation is even more important than for others because we believe in a strong welfare state to finance everyone's services,” he launched.