The Minister of Economy, Alícia Romero, has announced that the Catalan Government will approve a first package of measures next Tuesday to mitigate the impact of the war in the Middle East. These measures will target the economic sector, families, and promote renewable energy, as she explained at a press conference following a summit at the Palau de la Generalitat (the seat of the Catalan Parliament) to address the consequences of the war with parliamentary groups, with the exception of Vox and Aliança. Romero, who did not reveal specific figures for the announced measures, spoke of direct aid and financing options for companies in the most affected sectors, such as agriculture, fishing, transport, and mobility, as well as possible exemptions or reductions in certain taxes. Regarding support for families, she said that "there will not be major measures," but rather an aid program will be launched, allowing for the subsequent definition of which groups will receive the funds.
VAT reduction on fuels and extension of rental contracts: Sánchez's social safety net during the war
The coalition partners have agreed to divide the measures into two separate decree laws after an unprecedented clash
MadridAfter an unprecedented clash with the Sumar coalition ministers over the emergency plan to combat the war in Iran, Spanish Prime Minister Pedro Sánchez appeared at Moncloa Palace this Friday to explain a new social safety net, which he described as the "largest" in all of Europe. It will have two components: a package of tax cuts on fuel, gas, and electricity, and another decree-law on housing extending rental contracts for up to two years. He stated that there will be a total of 80 measures costing the public coffers 5 billion euros, primarily due to the reduction in the tax burden. "Spain is better prepared than other countries to face the energy shock resulting from Iran's illegal war," he asserted, referring to its strategic commitment to renewable energy. At the same time, Sánchez lamented that no plan, "however ambitious," will be able to "neutralize all the miseries" of the conflict and expressed his "anger at the state of the world."
Sánchez appeared two hours later than scheduled due to disagreements with Sumar. In an unprecedented move, the ministers led by Yolanda Díaz refused to enter the extraordinary cabinet meeting in protest against the fact that the decree did not include housing measures, which are destined to fail in Congress due to Junts' opposition. Sumar stood firm until Sánchez agreed to extend rental contracts. When asked about this issue, the Spanish president downplayed the disagreement. "It's just a bit of drama," he said. "Some cabinet meetings last longer than others," he added, simply stating that they are a government of "dialogue." For its part, Sumar asserted that the coalition was never in danger, and the Minister of Culture, Ernest Urtasun, said it was "logical" for negotiations to be prolonged when there is no agreement.
The content of the decree laws
60% reduction in electricity taxes
A first decree-law will include a "drastic" reduction in energy taxes, entailing a 60% cut in electricity-related taxes. On the one hand, the VAT on electricity and gas—including pellets and firewood—will be reduced from 21% to 10%. On the other hand, the energy production tax—currently 7%—will be temporarily eliminated, and the excise tax will be reduced from 5.5% to 0.5%. These measures will initially be in effect until June 30, although the Spanish government does not rule out lifting them at the end of May if the situation improves—depending on the annual evolution of the energy CPI.
VAT reduction on gasoline
VAT will also decrease for gasoline and diesel, which, according to the Prime Minister's office, will effectively reduce the price by about 30 cents per liter when filling up. For professional transport companies and the agri-food sector, there will be an additional direct subsidy of 20 cents per liter on the purchase of fuels and fertilizers—to be paid directly through the Tax Agency starting in April—and an 80% discount on electricity tolls for energy-intensive industries.
Aid for vulnerable groups
At the same time, aid for supplies is being restored –until the end of this year– with extraordinary discounts on the electricity social bonus –42.5% for vulnerable people and 57.5% for severely vulnerable people– and cutting off water and energy for non-payment to the most difficult households is prohibited.
Structural measures
From a structural point of view, to further the "decarbonization" of the economy, Sánchez has also announced "massive deductions" in personal income tax for the installation of solar panels, heat pumps and charging points, as well as aid to improve the energy efficiency of buildings.
Control of business margins
At the same time, the National Markets and Competition Commission (CNMC) is increasing its controls to prevent companies from taking advantage of the situation to gain more profit. Sumar demanded control of profit margins, which has finally been achieved by strengthening oversight through the CNMC and empowering the Council of Ministers to set limits on these profits.
Dwelling
Sánchez has also announced a second decree law that includes the extension of rental contracts until 2027. The Spanish president himself admitted that there is not a parliamentary majority for it to pass, but assured that for this reason the executive will not give up trying to approve the measures from the outset.
The political battle
The housing issue is precisely what sparked the clash with Sumar. Ultimately, they reached an agreement to divide the emergency plan into two separate decrees to avoid its complete failure from the outset. While the first, less contentious decree will be voted on in Congress next Thursday, the second will take longer—they have 30 days to ratify it—to try to convince the opposing parties. Urtasun has called for "mobilization" to achieve this.
As this newspaper explained yesterdayIt was clear that the emergency plan would include VAT cuts on fuel and electricity to appease Junts, but the Socialists resisted including housing-related measures, as demanded by Sumar, because they lack the necessary support in the Spanish Parliament. Both Junts and the PNV have warned the PSOE that they will not endorse the extension of rent control, which Sumar boasts of having approved despite not having the votes secured in Congress. Second Vice President Yolanda Díaz expressed her satisfaction on Bluesky: "That's what we're in government for," she said. Health Minister Mónica García also expressed her satisfaction.
On the other hand, the Confederation of Tenants' Unions believes the package of measures is "insufficient" and demands the addition of a rent freeze and the reinstatement of the eviction moratorium. Throughout the week, the Socialists had already signaled their intention to secure the support of the plurinational majority with minimal measures, while setting aside any that could jeopardize the approval of the emergency plan. In doing so, they also sought to pressure the People's Party (PP) to make it difficult for them to justify voting against it.
The priority of the emergency plan
The Spanish government has placed great importance on the approval of this package of measures, to the point that Sánchez has justified the delay in presenting the budget, which has been extended for three years, in order to prioritize this decree-law to mitigate the effects of the war. The Popular Party's general secretary, Miguel Tellado, has quipped that what has happened at Moncloa Palace is "worthy of the House of... Big BrotherAnd he has called for immediate elections in light of the coalition's "breakdown." However, despite announcing that they will vote against the housing decree, he said they will analyze the other one "in depth," since it includes tax cuts that the PP itself had proposed.
