The VAT reduction from 21% to 5% benefits households with a boiler for heating and hot water, in light of the harsh winter months
After the announcement by the President of the Government, Pedro Sánchez, about the reduction of VAT on the gas bill from the current 21% to 5%, it is time to perform the calculation for the millions of households that use this raw material to heat their house or the water in the shower and kitchen, with a view to the autumn and winter months, when this income rises exponentially due to higher consumption.
An average gas bill of 100 euros per month will amount to approximately 86.80 euros when the VAT measure is applied, foreseeable from October and in any case until December. That means an average saving of about 13.20 euros per month.
The VAT reduction runs a risk, as the same measure has had on the electricity bill: that consumers no longer notice when the price of the raw material rises as in recent months. In the case of the electricity bill, VAT has gone from 21% to 10% since June last year and to 5% since this spring, the legal minimum required by the European Union.
However, the cost of generating electricity has risen in recent months and practically ate the cut that the VAT cut meant. In the case of gas, estimates indicate that the price will remain high in the coming months.
Gas vouchers will start showing the VAT reduction when they are issued in November. It will only be a year after the first measure approved by the Commission to limit the rise in gas prices on the international market. It then imposed a cap on the regulated tariff (TUR) increases to prevent it from absorbing the 130% rise in the cost of that commodity recorded last summer.
Then the gas was at levels that seem laughable today: if the price exceeded 20 euros per megawatt hour (Mwh) in September 2021, the reference will be above 250 euros/Mwh this Thursday. That is, ten times more expensive, even above the 200 euro/MWh it registered in March, just after the Russian invasion of Ukraine.
With that ceiling on the TUR, the limited increase amounted to 4.34% on average, against 35% which, according to the government, would be the result of the automatic formula used until then. It has been applied in the two subsequent quarters, albeit with a smaller impact, as it offsets the difference between the actual price and the price capped by Moncloa.
In any case, at the end of March this year, after the end of winter, the so-called TUR had received 1.5 deliveries, some 17,000 less than last September. 80% of consumers opt for the free market, although their rates are usually more expensive but stable.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
