From Pimec to the hospitality sector: demands are growing on the Spanish government to approve measures related to the war.

MadridThe Spanish government is working on a package of measures to address the economic consequences of the war in the Middle East, especially the surge in energy prices. Meanwhile, employers' associations, unions, and various sectors of the economy are already presenting them with different demands, some of which share a common denominator: a tax cut. In fact, following the round of political talks between the Ministry of the Presidency and the parties in Congress, this Thursday morning it is the turn of the major unions and employers' associations: CCOO, UGT, CEOE, and Cepyme will meet with the Spanish government's economic ministers at the Ministry of Economy.

Fuel Tax Reduction

We're taking it one step at a time. The Catalan employers' association Pimec, for example, called on Wednesday for a temporary reduction in fuel taxes to curb inflation and protect the liquidity of small and medium-sized enterprises (SMEs) in the face of soaring diesel prices. In a statement, the organization warned that the sudden increase in diesel prices is already having a direct impact in Catalonia, particularly on sectors like transport and logistics, which are largely comprised of SMEs, and cautioned that the fuel price hikes could spread to the entire economy. In this context, the Ministry of Transport met Wednesday afternoon with representatives of the road transport sector to address the problems stemming from the conflict. The haulers are also demanding fuel subsidies, direct aid, and have already threatened a strike. Furthermore, hours earlier, the Minister of Economy, Carlos Cuerpo, and the president of the National Commission on Markets and Competition (CNMC) met to analyze possible "anomalous" situations in light of the escalating fuel prices and how to detect them.

Electricity bill

Executives from the Basque metalworking company Sidenor, which is also a major energy consumer, and Iberdrola have also set their sights on taxes. At a forum organized in Bilbao, representatives from both companies called for a reduction in electricity bill taxes and even the elimination of the 7% tax on electricity generation, which the Spanish government temporarily suspended in 2021 due to soaring prices. In any case, this is not the first time that the electricity company chaired by Ignacio Sánchez Galán has called for the elimination of this tax, even in a context without conflict. Meanwhile, the hospitality sector proposes adjustments to both fuel and electricity taxes.

Food

Beyond energy, the pressure on commodity prices will also be felt in food. After Mercadona proposed leaving the VAT on food at 0%—a measure that the president of the Spanish employers' association CEOE, Antonio Garamendi, did not embrace—the Spanish Federation of Fishermen and Frozen Food Producers has also demanded a change to this tax for seafood products, which currently have a 10% VAT, "before..."

One of the keys to understanding why food prices may rise lies in fertilizers. Through the Strait of Hormuz, the Middle East not only exports gas and oil, but also manufactured fertilizers, essential for modern agricultural production. Therefore, the blockage of this strategic maritime passage and the impediment to the movement of this product puts upward pressure on prices and, consequently, on food prices.

Unions' prudence

But while many voices are calling for tax cuts, CCOO is urging caution. The union, led by Unai Sordo, rejects a "general reduction" in taxes and advocates for price controls, as some countries have already implemented (such as Croatia on petroleum products) and as proposed by political parties like Podemos and Sumar.