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    The Government refuses to lower gas taxes at the height of the heating in homes


    September 23, 2021 - CE Noticias Financieras

     

      The escalating price of gas has put in check the electricity bill in recent months, but the rise in the price of this energy prepares another blow to families outside the electricity bill. The end of summer and the arrival of the heating season

      , in less than a month, will explain the next blow to the pockets of the Spanish.

      The price of gas reached 73.15 euros per megawatt-hour on Wednesday, when just a year ago barely reached 11 euros, a rise that is almost seven times its value. This week, Russia decided to close the supply of gas sent by Ukraine to Europe

      , which together with the increased demand for gas in Asia, will contribute to further inflate prices in the Old Continent.

      ciclo-combinado-castejon-navarra-wiki-recorte.jpg
      Why the price of light is at record highs and why we have not yet seen the worst

      The Government of Pedro Sanchez can do little to prevent these international tensions, although it has some tools to prevent the gas bill crush the finances of the 8 million households

      that will increase their use during this autumn-winter. The main one is taxation.

      Gas taxes

      And is that gas taxes continue to contribute month after month to fill the coffers of the State without the Treasury has been raised to lower them. From the gas employer Sedigas criticize the Executive has not decided to alleviate the taxation of gas

      in order to curb the inevitable rise in the cost of energy.

      In fact, gas is one of the few basic supplies of households in our country that still maintain VAT at a rate of 21%, compared to water or electricity, with 10%. In addition to VAT, gas is taxed with the Special Tax on Hydrocarbons, which also affects gasoline or diesel, although each has different tax rates. In the specific case of domestic gas consumption, the Special Hydrocarbon Tax (IEH) is 0.00234 euros for each kWh consumed. As with tobacco or alcohol, but unlike the fact that gas is a staple product, the Inland Revenue applies 21% VAT to this bill

      .

      Below, we present a model bill, with the amounts calculated according to the latest regulated tariffs, which are published in the BOE, and in force until 30 September. The Tariff of Last Resort (TUR) for natural gas is a regulated gas market tariff (similar to the PVPC price in the electricity market, where the 11 million consumers affected by the rise in electricity prices are).

      factura-gas.jpg

      The price of this tariff is revised every quarter

      taking into account the auctions in the wholesale market and taking as a reference the average cost of raw materials at international level and the price of a barrel of Brent. They

      are calculated for what in Spain we can consider two typical consumers

      :

      1. 2,500 kWh/year: this would correspond to a TUR.1, which is a customer with a consumption of less than 5,000 kWh/year.
      2. 9,000 kWh/year: this would correspond to a TUR.2, which is a customer with a consumption of more than 5,000 kWh/year and less than 50,000 kWh/year.

      As can be seen in the image, in the bill of 220 euros of a typical customer, 44 euros go directly to taxes, while, if the price is 603 euros, 126 euros go directly to the coffers of the State. That is, 20% of the total bill are taxes

      .

      From the gas employers Sedigas criticize that the Executive has not decided to alleviate the taxation of gas

      in order to curb the rising cost of energy. The employer recalls that gas is one of the few basic supplies of households in our country that maintain VAT at a rate of 21%, compared to water or electricity, with 10%.

      A new gas deficit

      Last June, the Socialist Executive decided to lower the VAT on electricity from 21% to 10%, after several months with the electricity bill out of control. As already published Libre Mercado

      , while the Treasury decided to apply this tax cut, taxes on electricity brought him pingues benefits. In addition, thanks to the increase in the cost of CO2 emission rights (a hidden tax), the revenue of the Treasury would be eaten by the served. Despite the great "shock plan" that has recently announced the Government to cheapen the light, the VAT reduction to the reduced rate will be temporary and will only keep until December.

      teresa-pedro.jpg
      Late, for a short time and not for everyone: the fine print of the lower VAT on light

      Within the macro energy plan that the Government approved last week, the only measure taken by the Executive to mitigate the impact of gas is limited to 4.6% for a semester the impact of the cost of gas in the TUR instead of 29% expected. The employers' association is also wary of this mechanism, as it will force the gas companies (Naturgy, Total, Repsol...) to assume the cost of the increase in gas, generating a debt and a new gas deficit, similar to that of electricity, as the expert Pedro Mielgo

      explained in this newspaper.

      That is, the only thing the Government is doing is to postpone the payment of the gas increase generating a debt

      , which consumers will then have to continue paying in their next bills, although the sector doubts how it will recover that money in 2022. According to the futures, it will not be until then that the price of gas is expected to abate. futuros-gas.jpg

      Sedigas criticizes "the possibility of incurring a structural tariff deficit for the gas system, which could jeopardize its economic and financial sustainability and question the process of liberalization of the sector that was undertaken more than two decades ago"

      .

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