The cost of the package is expected to be between €7,000 and €10,000 million, with measures aimed at reducing household bills
After many weeks of intense negotiations, the government is today taking advantage of the last Council of Ministers of the year to approve its third package of anti-crisis measures with a cost of between 7,000 and 10,000 million euros at the gates of a new year marked by the economic slowdown with inflation still very high, ending November at 6.7%.
Finally, it is expected that the bonus of 20 cents per liter of fuel, as it was known until now, will be abolished and will be limited to the sectors most affected by the consequences of the energy crisis, such as transporters.
With energy prices moderating, one of the main concerns of Spanish households is the sharp rise in food prices, which are rising twice as fast as general inflation this year, with rates already hovering around 15%.
Faced with this situation, the government would have refused to act by imposing an additional tax on large surfaces, a plan that is on the table, arguing that this type of measure will also work in sectors that benefit from the environmental flow, such as banking or energy. Finally, the executive will attack the shopping cart increase by cutting the VAT on some foods, such as fish, from 10% to 4%, Moncloa sources attached to this paper said.
Current legislation has a VAT of 21% for certain food-related products (including juices or soft drinks), 10% (fish, oil, pasta, yogurt, bottled water, coffee or preserves) and a minimum of 4% (eggs , vegetables, fruit, legumes, bread, cheese or milk).
What is already self-evident is the agreement to launch a support check to alleviate the increase in shopping cart spending. However, it remains to close the amount and who benefits. United We Can wants it to be 300 euros and not to be limited to vulnerable families, but also to have an impact on average incomes (less than 42,000 euros per year), which would allow it to reach between eight and ten million people.
In addition, the government is expected to extend already existing measures, such as the 2% limit for updating rents, the increase in non-contributory pensions by 15%, the free Cercanías and Media Distancia tickets for frequent travelers or the reduction of the VAT on the electricity bill from 10% to 5%, the reduction to 0.5% of the Special Tax on Electricity, and the temporary suspension of the Tax on the Value of Electricity Production.
According to data from the European Commission, Spain’s net budgetary cost of measures to alleviate the energy crisis this year is estimated to be 1.6% of GDP. That is about 19,000 million euros.
A figure that rings alarm bells about its impact on government accounts, at a time when the reduction of the deficit and public debt remains one of the main commitments with Brussels in the recovery plan that gives access to European funds.
The government has spent months defending its ability to pursue expansionary spending policies without jeopardizing the path to consolidation. And for now, it seems to be succeeding, supported by a historic rise in incomes largely explained by the effect of inflation on certain tax rates such as VAT or personal income tax, which also underpins the strong resistance of employment to the economic slowdown.
According to the latest public data from the Ministry of Finance, the state deficit was 2% of GDP in November, compared to 5.83% a year earlier. It is a gap of 26,500 million, much lower than the nearly 70,300 recorded 12 months earlier. Revenue rose to 237,298 million, of which taxes make up more than 80% of the total.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
