The objective is concrete: to lower the price of gasoline, electricity and gas for Spanish households, companies and the self-employed. The reason is well known: to curb the rise in energy prices, now out of control as a result of Putin’s war that is devastating Ukraine, and to relieve Spanish families who do not make it to the end of the month, do so in a hurry or are point of not doing so due to the consequent rise in inflation. But the means, how to execute it, is still not clear. The Government has committed to doing so and is already in talks, both within the Government and with other parliamentary groups. The proposals range from keeping VAT and excise taxes on fuel to a minimum (which would mean a saving of up to 15 euros for filling an average tank of 50 liters of gasoline), “deflating” personal income tax (which would leave up to 4,000 million in the pockets of taxpayers) to set a maximum price of 180 euros for a megawatt hour of electricity in the daily market. These are the measures and what they would mean if the requests of the opposition groups in Congress were accepted:
Fuel: More than 40 cents saved per liter of gasoline; 15 euros per deposit
Most of the parties that have met with the Government, especially the PP, have demanded a reduction in VAT on fuels and the temporary reduction of the special tax on hydrocarbons to the European minimum. These measures would mean a drop of between 40 and 50 cents per liter of 95 petrol. If applied today, the savings would be around 15 euros each time an average 50-litre tank is filled. The reduction is obtained from the reduction of VAT from 21% to 4% (as proposed by the PP) and from leaving the special tax at the European minimum, so that it goes from taxing 400 euros per 1,000 liters of gasoline to 359 euros (such and as Ciudadanos proposes).
If the cuts were applied to yesterday’s price (1.847 euros per liter for the 95, according to the average of the eight large gas station chains), the VAT applied would drop from 0.321 euros per liter (21%) to 0.061 euros (the 4%); while the other charge would fall from 0.47 euros per liter to 0.36 euros. The average savings per deposit is 13 euros in VAT and 2 euros in special taxes. This week drivers pay 42.9% in taxes for gasoline (0.793 euros) and between 38.1% and 37.2% for diesel A, the most common (from 0.696 to 0.710 euros per liter).
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The collection from January to November 2021, the latest updated figures from the Tax Agency, was 10,597 million in the hydrocarbon tax (of which 7,036 million were for the territorial administrations and the rest for the central administration). It was a 10% increase compared to the previous year. The collection for the electricity tax was 1,071 million euros from January to November 2021, with a reduction of 6% compared to the previous year due to the measures adopted by the Government in the last quarter of the year.
Personal income tax: The adjustment proposed by the PP will reduce the collection by up to 4,000 million
The PSOE and Podemos already said no in Congress a week ago, but the PP has returned to the fray with the proposal to “deflate” personal income tax that Ciudadanos already proposed and that received the support of Vox, popular and PDeCAT.
The popular ones calculate that this fiscal measure would mean a reduction in the collection of up to 4,000 million euros, an amount that the experts of the Technicians Union of the Ministry of Finance (Gestha) reduce to 2,000 million. That money would stay in the pockets of the workers. But what is deflating the personal income tax rate?
It consists of applying the price increase to each of the income tax brackets. If it were done today, with runaway inflation at 7.4%, it would mean revising the current income thresholds upwards by that same percentage, with the aim of preventing a taxpayer from ending up jumping to the higher bracket and, therefore, paying more of what would correspond to him.
The Government approved last Tuesday a reduction of 20% of the net income for agricultural and livestock activities that are taxed in personal income tax, which is estimated to benefit 918,000 farmers and ranchers.
Gas and electricity: a maximum price of 180 euros and a fund to compensate gas companies
The soaring price of electricity is no longer just a recurring conversation; now it is a serious problem. After the suffocation that caused the record of 545 euros per megawatt hour in the wholesale market, that price has fallen to less than half (263 euros yesterday) a figure that is still shot, marked by the evolution of the price of gas. But how can one price be separated from the other?
The Government wants Europe to approve a profound change in the EU energy market that implies, on the one hand, decoupling the price of gas from that of electricity and allowing the setting of ceilings on electricity prices.
There are already some clues as to how. The Minister of the Environment and Climate Action of Portugal, João Matos Fernandes, said Tuesday in the Portuguese Parliament that he is negotiating with Spain to set a maximum price of 180 euros per megawatt hour in the daily electricity market. Natural gas combined cycle plants with variable costs above that amount would receive the cost differential, paid by a common European fund or with the tariff deficit. This would allow a joint monthly saving for the two countries of 5.7 billion, he said.
[La vicepresidenta tercera y ministra para la Transición Ecológica y el Reto Demográfico, Teresa Ribera, ha confirmado este jueves en una entrevista en Onda Cero que tiene previsto presentar una propuesta negociada con Portugal al resto de socios europeos para limitar el precio del megavatio hora (MWh) en el mercado mayorista a 180 euros/MWh].
Reform of the electricity market: “Palliate the loss of purchasing power with the benefits of electricity companies”
The Second Vice President of the Government and Minister of Labor, Yolanda Díaz, suggested yesterday that they are preparing measures to use the extraordinary benefits of electricity companies to alleviate the loss of purchasing power of workers as a result of the high inflation that Spain is suffering. It was in her response to the PP deputy, Carolina España, during the control session with the Executive that Yolanda Díaz explained that the three large Spanish electricity companies had increased their profits by 47% last year, to exceed 10,000 million euros .
The vice president did not specify what the measure consisted of to cut the extraordinary benefits of electricity companies in the face of runaway energy prices. President Pedro Sánchez is confident that Europe will agree to a reform of the energy market that will allow the price of gas to be decoupled from the final price of energy, so that tariffs can be greatly reduced and, therefore, the extraordinary profits that they are achieving are lowered these months the electric companies. If there is no agreement in Europe for this reform, the Government will take other measures.
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