Free public transportation for young people and the unemployed will be approved and the VAT reductions on food will be extended until June
The Council of Ministers will approve tomorrow the partial extension of the ‘social shield’ to combat the effects of inflation, the energy crisis and the war in Ukraine, and will maintain the measures relating to the workplace, the impossibility of suspending basic supplies, the expansion of the discounts corresponding to the electric social bonus or the suspension of evictions, according to Sumar sources.
The new package that will be approved this Wednesday in the last Council of Ministers of the year will be the eighth promoted by the Executive to continue responding to the impact of the war in Ukraine and the increase in prices, a mobilization of resources that, until now, amounts to about 47,000 million euros.
This new anti-crisis decree will extend, in the labor field and in agreement with Sumar, the measures linked to the enjoyment of public aid, which expired on December 31. In this way, companies that have received direct aid or through ERTE and that dismiss them citing reasons such as increased energy costs will be obliged to repay the aid received.
Likewise, the suspension of evictions and launches of habitual residences for vulnerable people and families will be extended, the cutting of essential supplies will continue to be prohibited and the increase in discounts on the electric social bonus will also be extended.
Specifically, the social bonus was extended to those regular consumers whose joint annual income of the cohabitation unit was equal to or less than 2 times the IPREM of 14 payments (16,800 euros) and greater than 1.5 times the IPREM of 14 payments (12,600 euros). euros). Currently the discount varies between 65% and 80%, depending on the vulnerability situation of the families.
Also in this next package of measures, the elimination of the 4% VAT that applies to all basic foodstuffs, including bread, flour, milk, cheeses or eggs, and the reduction from 10% to 5% of oil and pasta, as announced by the President of the Government, Pedro Sánchez.
Among the basic foods that see the 4% VAT eliminated, common bread stands out, as well as frozen common bread dough and frozen common bread intended exclusively for the production of common bread; breadmaking flours; the following types of milk produced by any animal species: natural, certified, pasteurized, concentrated, skimmed, sterilized, UHT, evaporated and powdered; the cheeses; eggs and fruits, vegetables, legumes, tubers and cereals, which have the status of natural products in accordance with the Food Code.
According to the latest data published by the Tax Agency, these tax reductions have meant a loss of 1,573 million euros for the public coffers in January and November of this year.
TREASURY AND WORK CONTINUE NEGOTIATING IN AN “INTENSE” MANNER
The same sources indicate that “despite the fact that the bulk of the current measures will foreseeably be extended”, as is the case of those mentioned above, at this time the negotiations between the teams of the Ministries of Finance and Labor continue to be “intense” .
According to Sumar, there are measures that at this time still “stir up debate within the coalition government”, such as measures related to free public transport or the tax on banks and energy companies, so the negotiation work will continue between both parties “throughout the day.”
FREE PUBLIC TRANSPORTATION FOR YOUTH AND THE UNEMPLOYED
And one of the big unknowns is the decision that the Executive will make regarding the reduction in the price of public transport passes and multi-trip tickets – free buses and trains for regular users -.
Thus, the Government will have to decide whether to continue offering a 30% discount on public transport for the rest of the administrations as long as they commit to increasing this discount to 50%.
It should be remembered that the Executive included an allocation of 1,440 million euros in its 2024 budget plan for the subsidy of public transport, including free trains and buses and aid to the autonomous communities for discounts on transport under regional jurisdiction.
But the only thing that Sánchez has advanced on this matter is that public transport will be free for minors, young people and the unemployed, a measure that will be included in this next package.
DOUBTS ABOUT THE EXTENSION OF THE ENERGY TAX REDUCES
Likewise, it is not yet clear whether the VAT rate reductions to 5% on electricity and gas, wood and pellets will be extended beyond December 31, taking into account that this tax measure has had an impact between January and November collection of 728 million euros.
Among the tax reductions related to energy is also the application of the reduced tax rate of 0.5% of the Special Tax on Electricity, and the temporary suspension of the Tax on the value of the production of electrical energy, which in principle They are in effect until December 31.
Likewise, until December 31, 2023, the maximum price of a butane cylinder between 8 and 20 kilograms is limited to 19.55 euros, although this maximum price was last reached in the review of September 19, 2022.
END OF THE IBERIAN MECHANISM WHEN IT EXPIRES ON DECEMBER 31
One of the measures that has had the greatest effect in recent months to address the increase in prices, mainly energy, is the ‘Iberian’ mechanism, which has allowed Spain and Portugal to decouple the evolution of the price of electricity from the price of gas. natural.
However, the third vice president of the Government and minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera, has already announced that it will decline on December 31, after pointing out that the European Commission considers that it is not “possible to put it into practice.” .
Sources from the Ministry assume that the measure will expire when it expires at the end of December, after pointing out that Spain already expected that the extension negotiated with Brussels before the summer would be the last, taking into account that the instrument has not had any effect on the processes of Marginal matching in wholesale markets since the end of February.
The so-called ‘Iberian exception’ was approved in June 2022 and was extended until the end of 2023 after the agreement reached by Spain and Portugal with the European Commission that extended the measure for seven months.
