The Spanish government on Tuesday announced the elimination of VAT on basic foodstuffs and aid to families, farmers and the gas industry as ways to deal with the energy crisis and inflation caused by the war in Ukraine.
Among the measures announced by the Prime Minister, Pedro Sánchez, the end of value added tax (VAT) collection on foods considered essential, such as bread, milk, cheese, eggs, fruits, vegetables and legumes, potatoes and grains.
These products had a VAT of 4%.
The Spanish government also decided at a meeting of the Council of Ministers held today reduce VAT on olive oil and pasta from 10 to 5%.
In addition, the Madrid executive will provide a package of assistance to various sectors, starting with families with an annual income of up to 27,000 euros.
As announced, 4.2 million families will receive support of 200 euros, and it was also decided to extend the terms of leases ending on June 30, 2023 by six months to avoid unjustified increases.
Farmers will also receive direct support from the state, amounting to EUR 300 million, with the aim of offsetting the increase in costs due to the increase in fertilizer costs, while the gas industry will receive a new liquidity line of EUR 500 million. .
The Spanish government will also provide EUR 450 million in support to the ceramics sector and other sub-sectors, in addition to an investment of EUR 3,100 million in industrial decarbonisation.
On the other hand, Sánchez added that some measures already taken will be maintained next year, such as free travel on medium-distance public transport, a 30% reduction in the cost of urban and inter-urban transport and the extension of the reduction of the electricity and gas tax.
The support also provides for the enforcement, in 2023, of the maximum price freeze for gas bottles, the extension of the 2% limit on annual rent updates and the suspension of evictions of vulnerable families.
Next year, the ban on cutting off supplies if essential services, such as water, electricity or gas, will also be enforced. and the wider social subsidies that started this year will be maintained.
The 15% increase in minimum living income and non-contributory pensions will also be maintained and the possibility of partial reform extended until 2024 to promote generational replacement and job creation, especially in industry.
The Spanish government has also extended subsidies for the unemployed affected by the volcanic eruption on the island of Las Palmas and has maintained the ban on layoffs in companies affiliated to the aid program due to the increase in energy costs due to of the war in Ukraine.
As of December 31, the discount of 20 cents per liter of fuel will only be given to professional road transport and farmers, while fishermen will receive 120 million euros in direct aid.
The Council of Ministers also approved an 8.5% increase in pensions, following the rise in inflation, to ensure the purchasing power of retirees, and gave the go-ahead to improve active retirement, allowing healthcare workers access to primary care, general practitioners and paediatricians of retirement age will continue to work for the next 3 years.
The measures decided today in the Council of Ministers are the third aid package from the Spanish government to alleviate the economic and social consequences of the war in Ukraine and will have an impact of EUR 10 billion.
Despite the fact that Spain has managed to moderate the price increase in recent months and is already doing so the country with the lowest inflation in the eurozonethe government decided to promote this support package to “reduce the cost of primary goods and services related to food and energy”.
According to Pedro Sánchez in a press conference, the total resources allocated by the executive branch will allocate a total of 45,000 million euros to protect the country’s middle and working class and productive fabric from the rise in the cost of living.
Source: DN
