The Spanish government approves the extension of the VAT reduction on basic foodstuffs and transport aid

Today, Tuesday 27 June, the Council of Ministers approves a Royal Decree-Law to extend some of the measures aimed at coping with the economic consequences of the war in Ukraine and price increases, such as the reduction of VAT on basic food and support for the public transport.

The Basque municipalities and Euskotren had already anticipated these measures and throughout June they announced that they will keep the 50% discount on public transport. In particular, Euskotren continues to offer discounts on its train, tram and funicular services. Araba has announced that it will maintain the discounts with the BAT card. Bizkaia applies the discount to all temporary CTB tickets, as well as Creditrans and Giza consortium tickets. Gipuzkoa will also apply the 50% discount until the end of the year to users who pay for their trips with the Mugi card.

The decree to be approved by the Council of Ministers extends a number of measures approved in December 2022, which will expire on June 30.

In an interview with a radio station, Pedro Sánchez announced that the VAT reduction on food, the subscription to public transport and “all those social elements that I mentioned from the beginning of the war that will always be on the table”. Likewise, he said that “some new elements” will be included related to the “economic and social response”, and “others related to measures that have either been agreed with Brussels and need to be approved, or are politically .” commitments of the Government of Spain”. Indeed, the same Royal Decree will include the right to be forgotten oncology.

Between the new itemsSánchez announced the approval of a 15% deduction in income tax (IRPF) for the purchase of electric vehicles that “stimulate the green transition” until December 31.

Concerning the public transportthe reduction in the price of season tickets and multi-ride tickets is extended and thus added to the Renfe Cercanías and medium-distance discount, which had been set for the whole year.

However, they stay pending decision some measures that also expire on June 30. Among other things, the Executive will have to decide whether to maintain the discount of 20 cents per liter on fuel for professional road transport or whether to support the autonomous communities and municipalities for petrol for public buses.

in energetic key, must decide whether or not to extend the VAT reduction on the electricity bill from 10% to 5% applied to consumers, companies or individuals, with a contracted capacity of up to 10 kilowatts. This also includes the reduction of the VAT rate for the purchase of natural gas from 21% to 5%.

The extension of the temporary suspension of the Tax on the value of the production of electrical energy also ends on June 30, while the application of the tax rate of 0.5% of the Special Tax on Electricity is extended until December 31 of this year.

Similarly, the government must decide whether to end the 80% toll cut in electricity-intensive industry; VAT at 4% for masks and 0% for goods and benefits to fight covid; and the limitation to the maximum price in the butane bottle. Another question is whether or not the objective reason for dismissal is renewed in companies that have enjoyed some support due to the rise in energy costs.

In the absence of the plenary assembly due to the dissolution of the Cortes as a result of electoral progress, it is the permanent deputation, the only body left standing, which will assume the power to enforce the measures taken by the government. validate or withdraw. approves this Tuesday by legislative decree.