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ARCHIVED - Spanish government considers cutting VAT on electricity bills
The temporary move is being mooted as a solution to sharp rises in household energy costs
The recent modification of the way in which household electricity bills are calculated has coincided with a sharp increase in the cost per unit as the hot summer weather begins in Spain, and the resulting concern over the strain placed on domestic finances throughout the country has made it likely that the government will intervene to limit the effect on people’s pockets.
Various measures are reported to be under consideration, including a proposal to temporarily reduce the rate of VAT payable on electricity from 21 per cent to 10 per cent. If this is adopted it would represent an expense to the government of approximately 3,000 million euros per year – as a well as a saving of the same amount for those paying their bills.
It is by no means certain that this will be the strategy adopted, but Teresa Ribera, the Minister for Ecological Transition, stated on Wednesday that it is “probable” that “some fiscal elements” will be suspended in order to reduce monthly bills. This marks something of a U-turn from her rejection a month ago of a similar proposal made by the opposition PP party, but Sra Ribera also indicated that any adjustment will be temporary and provisional.
Consumers’ associations calculate that in present conditions average monthly household electricity bills will be around 87 euros this month, and that of the VAT is reduced as suggested the equivalent would be 79.10 euros.