Spanish PM wants to reduce VAT on electricity to 5%

by Lorraine Williamson
VAT reduction on electricity

MADRID – To tackle runaway inflation, Prime Minister Sánchez of Spain announces a cut in VAT on electricity. Furthermore, at the request of the Partido Popular, this will go from 10% to 5%. 

The president announced the VAT cut three days after the election crash of his party PSOE in Andalucia. However, the measure will be approved next Saturday at an extraordinary meeting of the Council of Ministers. Then the green light will also be given for the decree with anti-crisis measures to cope with the economic consequences of the war in Ukraine. 

Sánchez defended the reduction in VAT on electricity, arguing to “protect” families who are most affected by the price increases. 

Support for the anti-crisis decree 

Sánchez has asked all parliamentary groups to support the anti-crisis decree. However, it has yet to be ratified in parliament. The president again blamed the war in Ukraine for the price hikes. He championed initiatives his government has already launched to help families, businesses, and industries. 

Casa Las Dunas Spain

Gabriel Rufián (Esquerra Republicana de Catalunya ERC) had demanded measures against inflation from the president. This would include a tax on large wealth, on electric companies, and a fairer tax system that redistributes wealth in a real way. The Republican Party spokesman warned him that if he does not take action, this situation could mean the end of this government. 

Rufían recalled in his speech that gasoline has increased by 66% and electricity by 48%. Meanwhile, the energy giant Iberdrola earned €3.9 billion in 2021. On the other hand, people no longer dare to turn on the air conditioning during a historically early heat wave. 

VAT reduction on electricity was demanded by PP 

The measure to reduce the VAT on the electricity price was one of the demands of the PP to deal with the price crisis. Furthermore, PP leader Alberto Núñez Feijóo called for it in his urgent action plan he submitted weeks ago. 

Also read: Spain´s electricity prices soar

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