To help families most severely hit by inflation, the government approved a significant VAT drop for domestic natural gas from 21% to 5%, saving almost €210 million for Spanish consumers.
The proposal, initially put forward by the centre-right Partido Popular (PP/EPP), the main opposition force in parliament, will come into effect in October.
The measure will also apply to wood chips, pellets and firewood, Ecological Transition Minister Teresa Ribera (PSOE/S&D) said on Tuesday (20 September).
“We fulfil our commitment to the social majority of this country by reducing electricity taxes by up to 80% to help families and businesses in the face of this energy crisis,” Prime Minister Pedro Sánchez said on Twitter.
Though the measure is set to run until 31 December in principle, Sánchez stressed that it could be extended throughout 2023 if necessary.
The rebate will also be extended to all natural gas supplies for boilers of homeowners’ communities which, due to the volumes they handle, cannot benefit from a regulated tariff, whose increase is limited by the government to 5% per quarter.
This is the second VAT reduction on energy products the government has approved as the government approved a 5% VAT reduction on electricity prices in June.
Meanwhile, Ribera on Tuesday met with PP’s Deputy Secretary of Economy, Juan Bravo, to negotiate the details of the energy-saving plan Spain must submit to the European Commission in the coming weeks.
Last week, the PP sent its proposal of an “energy rescue plan” for families and companies to the government, with concrete proposals to reduce help the most vulnerable.
Among other measures, the draft submitted by the PP includes direct discounts on the energy bill depending on the percentage of consumption savings, which could reach up to 20% in the case of electricity and up to 40% in the gas bill.
It also suggests, among other points, the creation of an independent body to evaluate the Spanish energy policy and the possibility of extending the lifespan of the seven nuclear plants still in service in the Iberian country, according to official sources.