MADRID – To mitigate the economic and social consequences of the war in Ukraine, the government of Spain on Saturday extended its ‘anti-crisis plan’ measures until December 31.
The package of goverment measures will cost the treasury more than €9 billion and should keep inflation at 3.5%. It includes direct support to the most vulnerable workers and sectors most affected, new tax cuts, and the extension of measures launched in March to contain runaway price increases.
Consequently, the plan, which will come into effect on 1 July, is now going to parliament. However, it needs sufficient support from the parliamentary groups for final approval.
The most important government measures
Furthermore, there will be a payment of €200 for low-income workers. This is the star measure of the new decree. It involves a one-off payment of €200 for employees with an income of fewer than €14,000 per year and whose assets, less housing costs (rent or mortgage) do not exceed €43,196.40. However, people who already receive the minimum vital income or other pensions/benefits are not eligible. The payment can be requested from July. It is estimated that this measure will benefit 2.7 million people and increase their income by €540 million.
50% off state transit passes. To encourage the use of public transport, there will be a 50% discount on all transport passes from state-owned companies, such as Renfe. In the case of transport subscriptions dependent on municipalities and autonomous communities, the discount by the State will be 30% and local authorities can extend it up to 50% with their resources. In that case, it will come into effect from 1 September.
Non-contributory pensions will increase by 15%. The old-age and disability pensions will increase by 15% until the end of the year. That means an increase of €60 per month and €360 between now and the end of the year.
VAT on electricity from 10 to 5%. This was one of the first measures announced this week. The reduction of the special tax on Electricity to 0.5% will also remain in place, as will the suspension of the tax on electricity production. However, these were already included in the previous decree. Therefore, these measures will generate additional savings of €3,600 million for households and businesses between July and December. According to the government, Spain will become the EU country with the lowest VAT on electricity. Furthermore, this reduction will benefit 27.7 million households, SMEs, and the self-employed.
The ‘anti-crisis plan’ also includes the extension of the mechanism to reduce the excess profits in the electricity market caused by the high natural gas price on the international markets.
600,000 additional families are eligible for the electricity social voucher. Consequently, that brings the total to 1.9 million households
Furthermore, the ban on cutting off the electricity supply to consumers in a vulnerable situation remains in force.
Freezing the price of the butane gas cylinder. This increased by 40% in the past year. The price of May: €19.95 will remain until the end of the year. In May it stood at €19.55 and will remain so until the end of the year.
A discount of 20 cents on every litre of fuel for all citizens is extended. The government pays 15 cents of this rebate and the oil companies give the remaining 5 cents. The discount mainly benefits carriers, but also other users. The impact of this measure between July and December 2022 is estimated at €4,038 million.
The direct support for the gas-intensive sector is extended to other activities in this area. This direct support has a maximum amount of €400,000 per company.
Support for transport companies. New measures to support the sustainability of road freight transport.
Support to the primary sector. The agriculture, livestock and fisheries, and aquaculture sectors are supported with an extension of the €60 million in the support line for taking out agricultural insurance.
Deferral of social security contributions. Companies and the self-employed have the option to defer their social security contributions for three months at an interest rate of 0.5%, seven times lower than normal.
2% limit on rent increases. The 2% limit on rental reviews is extended until December 31.
15% increase in the minimum vital income. The 15% increase in Minimum Vital Income (IVM) will be extended.
Ban on layoffs. People should not be fired for reasons related to the increase in energy costs. This measure also applies to companies receiving direct aid.
Ban on evictions. Until December 31, 2022, a suspension of evictions of vulnerable persons and families will apply.