The memorandum signed on June 17 by Iran and the United States is not fully consolidated. Attacks and reprisals on both sides continue to strain the Strait of Hormuz and, consequently, the price of oil, which had recovered, albeit briefly, to its pre-conflict price. Forecasts suggest that the price per barrel will remain high if the situation does not stabilize. In this context, the European Central Bank raised interest rates for the first time in almost three years, with the aim of curbing inflation that had reached 3.2% in the euro area.
In parallel, European countries, on an individual basis, are also approving measures to try to alleviate the situation for families and businesses. The most generous country in fiscal measures? The Spanish state, which seems to be spending between 0.3% and 0.4% of GDP on it. The European Commission had already warned the Spanish government when, in March, it reduced VAT on fuels to 10%, contrary to what a European directive stipulates.
Perhaps that is why the second package of measures, approved at the beginning of this week, only maintains the reduction of the other tax levied on gasoline: the hydrocarbon tax. Until now, we have benefited from a 20-cent discount per liter, and this will be gradually reduced as summer progresses: 15 in July, 10 in August, and 5 in September. In this way, the rocket effect – a rapid price increase – is avoided during the high season, and the controversial reduction of VAT on fuels is bypassed. (However, the royal decree includes a safeguard to return to reduced VAT if there were a considerable increase in the CPI for electricity or gas.) It is worth remembering that this second package of measures must be approved by Congress within a month. If the situation in the Middle East finally stabilizes, the president will be able to let it lapse without giving many further explanations.
A second criticism from the European Commission to the Spanish state is that the bulk of the approved measures are not focused on the most vulnerable, but benefit everyone equally, regardless of economic level. And despite the significant spending on this issue, the Spanish state has not achieved an inflation much different from that of peer countries in the European Union that have dedicated less of their budget to compensating affected sectors. The comparison is revealing. France has avoided generalized tax cuts, and instead has strengthened the energy check, which is a nominative aid that automatically reaches six million households according to income and family composition. Belgium has followed a similar logic with its social tariff for electricity and gas: a reduced price that applies to those who already receive certain social benefits, without the need to make any application. Neither of the two countries has touched VAT or subsidized the price of fuel for the general population, which has allowed them a tighter budget, exactly the approach Brussels is demanding from Madrid.
Universal measures have a higher cost, but they make everyone happy. Perhaps this, and no other, is the true logic behind these measures.
