Energy
Business 01/09/2022

Sánchez to reduce gas VAT from 21% to 5% starting in October

Spanish President defends "selective tax cuts" to lower heating bills

3 min
Pedro Sánchez in a control session in Congress.

MadridThe Spanish government had already reduced VAT on electricity to 5% and now it is doing the same with gas. These are "selective tax cuts", said Spanish PM Pedro Sánchez, with the aim of lowering the heating bill in autumn and winter. It will be applied from October until December 31, with a possibility of extending it if inflation continues, Sánchez explained this Thursday in an interview with Cadena SER. The announcement comes the day after the PP demanded this same measure and government spokeswoman Isabel Rodriguez rejected it claiming the "priority is to reduce energy consumption" and that the Spanish Government was already making an "unprecedented effort". "[The government] continues to make its own in dribs and drabs some of the PP's measures after criticising them," PP leader Alberto Núñez Feijóo replied, via Twitter.

Also today, third deputy president and Minister of Ecological Transition Teresa Ribera is to hold a meeting with the parliamentary groups' spokespersons to address the contingency plan it is to submit to Brussels during the month of September. In principle, it will not include mandatory restrictions on consumption for citizens and companies. "We have a relatively safer situation in relation to other countries," said Sánchez. The Spanish president has highlighted the value of the Iberian exception on the gas cap, assured that it is containing the rise in bills by 15% and that Spain will have saved €1.3bn between June 15 and August 15. Following the announcement made by the President of the European Commission, Ursula von der Leyen, who on Monday called for a reform of the electricity market, the Spanish President stressed that there are other countries that are now seeking the same conditions that apply to Spain and Portugal have.

On a political level, Sánchez criticised the PP for drawing a "catastrophic" scenario and ignoring the "strengths" of the Spanish economy, which he exemplified by the reduction of the deficit and public debt. The Spanish president has listed all the measures which the PP has opposed of late: free public transport, the increase in minimum wage, the "Iberian exception", as well as the tax on banks and energy corporations on their windfall profits. In this sense, the socialist leader has accused the conservative president, Alberto Núñez Feijóo, of being "docile with the interests" of business and has criticised his "denialist" opposition. "Neither with Pablo Casado nor with Feijóo have I had any kind of help. For me it is a disappointment," he said.

That is why he has taken for granted that next year's budgets, the last of the legislature, will have to be negotiated with the parties that invested him president: Esquerra, PNV, PDECat and EH Bildu. The latter was once again attacked in recent hours by the right wing as a result of 13 ETA prisoners, among them its former leaders 'Txapote' and Henri Parot, being transferred to prisons closer to the Basque Country. The PP understands the move is part of a deal struck by the government with Bildu. Asked about this issue, Sánchez has recalled that the governments of José Maria Aznar took hundreds of ETA prisoners closer to the Basque Country while the terrorist group was still killing. "What we have seen these years, 11 years after the disappearance of ETA, is the spurious use of anti-terrorist policy," he noted. In addition, he has made it clear that there is no reduction in sentences, but compliance with penitentiary legislation.

Request for employers to negotiate

Beyond energy, Sanchez also wanted to send a message to employers to sit down and negotiate wages with unions. The Minister of Labour, Yolanda Díaz, has reiterated in recent days that employers' representatives "are not up to the task". The Spanish president did not go as far, but he has asked for a deal to be struck on collective bargaining agreements. The new labour law put collective bargaining back on centre stage, and we must encourage the law to be followed completely by all parties", he stressed. Unlike his second vice-president, Sánchez did not call on unions to demonstrate and limited himself to "respecting" their right to do so.

The discrepancies between PSOE and Unidas Podemos are more evident in the case of the increase in defence spending. Last week, Díaz warned that the increase was not reflected in the new spending ceiling agreed within the coalition, and Sánchez claimed that the new accounts will include this increase. "There will be dialogue and negotiation", Sánchez predicted. The Spanish PM also spoke of industries linked to the military sector located in Albacete, Ferrol, Cádiz, Cartagena and Euskadi, and the thousands of qualified jobs linked to it. "We are not only talking about deterrence and fulfilling NATO commitments, but we are also talking about economy, jobs and territorial cohesion", he pointed out.

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