After electricity, it is the turn of gasoline and diesel. The Minister of Finance, María Jesús Montero, has taken over this Monday from the Conference of Presidents, which the day before agreed to “intensify tax cuts to cushion the impact of energy prices” -without further specification-, and has opened the door to a tax reduction on gasoline and diesel. “We are going to study a package of measures, some of them will go through downward revision of the taxation of some sectors or products that are clearly impacted by the increase in inflation (…) With that, I am making a lot of progress regarding the attitude of the Government ”, has slipped. 45% of the final price of diesel at the pumps and almost 50% of gasoline are taxes. Both fuels are at record highs since before Russia invaded Ukraine, but Vladimir Putin’s aggression has further aggravated the problem.
The two main fiscal figures that tax fuels are VAT and the special tax on hydrocarbons. In the first case, neither gasoline nor diesel are part of the list of goods to which the Executive can apply reduced rates of this tax (today, at 21%, with a share that has skyrocketed exponentially in recent months in parallel to the rise in the price of fuel and that would go to 10% if the reduction goes ahead), so it will have to wait for Brussels to give its arm to twist in the coming weeks. If it occurs, the negotiation would coincide with the talks between the Executive of Pedro Sánchez and the European authorities to separate electricity prices from the escalation of natural gas.
In the second case, that of the special tax —a fixed fee of 47 euro cents per liter of gasoline and 38 in diesel—, Spain could lower it without having to entrust itself to the Community Executive. Only, yes, up to the minimum threshold set by the European Commission itself. The same happens in the case of electricity, a section in which in Spain 10% VAT and 0.5% special tax have already been paid since the beginning of the energy crisis, and in which there are no more room for maneuver for discounts.
Fuels are a huge source of tax collection for the public piggy bank: both for the state and for the autonomous communities. Historically, however, Spain is among the EU countries with the lowest tax burden for both gasoline and diesel. And the big difference with the rest is, fundamentally, in the section of specials, substantially lower than in the majority of partners of the monetary bloc.
The Ministry of Finance, however, subjects any specific decision to the “round of talks with the political parties” and with the social agents, which will open in the coming days. “We have to be cautious when anticipating any type of measure until it is discussed and agreed upon,” said Montero. Along the same lines, the Minister of Agriculture, Luis Planas, has acknowledged that the reduction in taxation on fuels is “one of the variables” on the table at the moment. “We are in an exceptional moment and we will have to take it into account”, he stressed after the farmer representatives cried out against the increase in energy costs and some fishing boats have announced that they will not go out to fish because it is not profitable for them .
Without directly touching taxation, other countries of the Twenty-seven, such as France, have recently announced discounts —in the case of the neighboring country, of 15 cents per liter— paid for with public money. The objective is the same: to try to make the situation more bearable for the citizens’ pockets. The other great leader of the bloc, Germany, is also considering taking actions in the same direction, as Olaf Scholz’s Finance Minister, Christian Lindner, advanced on Monday.
He knows in depth all the sides of the coin.
European negotiation to stop the escalation of electricity
10 days of vertigo are coming in the high European instances to try to illuminate a scheme that allows the prices of electricity to be separated from those of natural gas, and Spain is playing it in a special way. After last week getting the European Commission to assume part of his postulates, Sánchez will try to gather support in various capitals of the bloc to reach the summit of heads of state and government at the end of the month.
Government sources stress that the will of the Executive is to hurry up the margin of negotiation as much as possible to achieve a consensus before taking any unilateral movement. But, at this point, no one rules out that if the round with the rest of the countries does not bear the expected results and Berlin – the most belligerent with price caps – maintains its refusal to row in that direction, Madrid ends up distancing itself and taking its own measures. Spain is one of the most exposed to the escalation of electricity in the wholesale market, given that more than one in three households has a contract that drinks directly from it.
Beyond these conversations with the rest of the European partners, the Spanish Government is preparing for the coming weeks changes in the financing model of the social bond, the aid received by the most vulnerable consumers and large families. After three setbacks by the Supreme Court in recent years, it is the State and not the electricity companies —as was arranged in successive legislations— that is having to take charge former post of these subsidies, which fluctuate between 60% and 70% depending on the degree of fragility of each household.