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    Sanchez announces a new 5% reduction in VAT on electricity


    June 22, 2022 - CE Noticias Financieras

     

      With the catastrophic results of the Andalusian elections on the table, the President of the Government, Pedro Sánchez, has announced a new reduction in the VAT on electricity. If it has already been lowered from 21% to 10%, the new decree will include a new decrease, to 5%. It has been in a response to the ERC spokesman in Congress, Gabriel Rufián, who has warned him that the rise in prices "can sweep you and us".

      "This government also speaks clearly to citizens and we have a war at the gates of Europe. We have reached an agreement for the Iberian exception and putting in place measures to protect families and businesses in our country. That is why we loweredthe VAT on electricity to 10% and now to 5%", he announced and then asked for the support of the rest of the parliamentary groups.

      The measure of the VAT reduction in the electricity bill came into force more than a year ago when the energy crisis began to loom. At that time, the lack of gas due to the high Asian demand and several heat waves caused the cost of the raw material to skyrocket.

      This new extension coincides with the information already advanced by this newspaper, since the energy companies consider that the measures imposed a year ago would be maintained for a long period of time, in view of the escalation of energy prices.

      It should be remembered that the Executive, in addition to the reduced VAT, has already applied other fiscal measures such as the suspension of the tax on the Production of Electrical Energy and the reduction to 0.5% of the Special Tax on Electricity.

      The reduction from 10% to 5% will come a few days after the so-called Iberian energy derogation. Brussels authorized Spain and Portugal to limit the price of gas when generating electricity through combined cycle technology.

      Teresa Ribera, Minister of Ecological Transition, assured that the cap on the raw material would mean a reduction in the bill of up to 20%, although she had to rectify the figures as she did not take into account all the contracts in the electricity market. However, the heat wave that hit Spain has made it impossible, for the time being, to check its effect and the cost per megawatt hour has remained at similar prices due to the compensation to these technologies.

      Charge to electricity companies

      This measure, therefore, pushes the Executive to accelerate its plans to impose greater fiscal impositions on energy companies. This Tuesday was the first debate in the Commission for the Ecological Transition of the Congress of Deputies for the approval of the National Fund for the Sustainability of the Electricity System (FNSSE), a law that aims to transfer part of the costs of the electricity bill to the companies in the sector.

      The FNSSE aims to reduce the electricity bill by 13% in five years after removing from the bill the cost of premiums for renewable energies. The draft bill aims to curb the over-remuneration received in the wholesale market by the generation of energy through non-CO2 emitting power plants (hydro and nuclear) prior to 2005, which will result in a reduction of the electricity bill between 4% and 5%.

      In turn, Yolanda Díaz, Second Vice-President of the Government and Minister of Labor, assured that it is "time" for energy companies to pay more taxes. To this end, she asked Pedro Sánchez to raise the corporate tax rate by 10 points to raise up to 2,000 million euros.

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