MADRID – The government will distribute a ‘petrol cheque’ of 100 euros to ten million Spaniards who earn less than 2,000 euros a month. Consequently, the discount of 20 cents per litre of fuel for the entire population will disappear. Only carriers are still eligible for this.
The support package introduced by the government of Spain to curb the negative consequences of the war in Ukraine for the Spanish population will expire on December 31. However, this does not mean that all support disappears. New measures will be introduced that are aimed more at the groups of citizens who need them.
The fuel subsidy scheme benefited all Spaniards. However it also included those who have not experienced any financial problems as a result of the economic crisis. But, the government has now recognised that much of the petrol bonus benefited higher incomes. This is because many people on low incomes do not own a car and use public transport more or have small cars that consume less.
It will benefit the entire population
According to El Confidencial, the content of the new decree with support measures will be broadly the same as the old one. The newspaper bases this on sources at the Ministry of Economic Affairs. However, an analysis is now being made of where improvements and adjustments need to be made.
One of the most important amendments to the decree aims to target aid to families and income levels that need more support. The same applies to the €200 “food voucher” announced earlier this week for families earning less than €1,000 a month. The sources assure that the government has thus decided to abolish the discount on petrol for consumers who earn more than €2,000 net per month.
That bonus will now almost certainly be replaced by a petrol cheque that will benefit approximately 10 million Spaniards. 70% of the population with salaries below that figure, according to data from the National Institute of Statistics (INE). In other words: everyone who earns less than €2,000 net per month receives this “inflation allowance” once. The amount is still being negotiated within the government, but it will be around €100.
The check is paid automatically
The idea is that this petrol cheque is “automatic” and reaches salaried employees, the unemployed, the self-employed or pensioners whose monthly income does not reach the set ceiling. The cost of the measure to the state treasury will depend on the final amount determined for the so-called ‘petrol check’ and has not yet been calculated.
The government categorically rules out a reduction in fuel taxes, stating that “it is expensive”, and unaffordable, for the state treasury. Moreover, once the crisis is over, it will be difficult to raise excise duties again.
Criticism from the Bank of Spain
Since the introduction of the fuel discount, numerous criticisms have emerged because it was aimed at all citizens, regardless of their income level. The Spanish Bank spoke in its annual report about the “waste of resources”.
“It is a very generic measure, which may even have a regressive character, as lower-income households are likely to consume less of these products,” the banking regulator openly warned. The institution also emphasised that high incomes benefit more from the measure than households with lower purchasing power.