The President of the Government, Pedro Sánchez, announced this Saturday a new tax for extraordinary profits obtained by electricity companies. However, this measure has not been included in the package for the response to the inflation crisis that the economy is experiencing due to the war in Ukraine, since a bill will be presented in Congress by the PSOE and United We Can so that in force in 2023. The President of the Government has justified that this measure “is not in the Royal Decree because it cannot be”. Moncloa sources point out that despite coming into force in 2023, it will already tax the benefits of 2022.
The package of measures includes an extension of those that already existed in the previous Royal Decree, approved in March, and adds some new ones. The extension, until December 31, is valued at a cost of 9,000 million euros, according to Sánchez at a press conference. Of these, 5,500 million correspond to expenses and the rest to tax reductions. Added to the 6,000 million of the previous package, the Executive puts the measures at 15,000 million. “It is more than one point of the GDP of our country”, assured Sánchez.
The President of the Government has defended that with the package of measures against inflation it has been possible to cushion the rise in prices “by 3.5 points”. “Without all these measures, inflation would be much higher, it would reach 14 or 15 points,” Sánchez assured. In May the CPI reached 8.7%.
Sánchez has wanted to mark a profile against “the economic powers”. “It is evident that uncomfortable results for certain economic powers that have their media terminals and their political terminals”, the President of the Government assured during the press conference on several occasions. “This government is clear about who it governs and who it serves”, referring to the “middle classes and workers”. “Those who are benefiting extraordinarily should pay more,” he defended. “This bothers certain powers but we are going to continue with this roadmap”, he has settled.
Among the new measures that have been proposed, the Government has announced a 50% reduction in the monthly transport vouchers owned by the State, such as suburban trains or Renfe. In addition, it adds a 30% discount for transport that depends on Communities and City Councils, leaving it in the hands of these administrations to complete the subsidy up to 50%. This measure, however, will only be in force from September 1 of this year and until the end of the course. “In Madrid, a monthly suburban bond would go from 29 to 14.5. In Catalonia it would go from 25.5 to 12.7. Or in Seville from 34.70 to 17.5 euros. We want to promote public transport”, Sánchez explained.
Aid of 200 euros for self-employed and unemployed
The check to low-income workers proposed by Yolanda Díaz’s team has been the measure that has cost the most to get off the ground. United We Can had proposed an aid of 300 euros to all workers who received the minimum wage or less than 1,000 euros. Finally, an intermediate solution has been chosen with an aid of 200 euros for families that earn less than 14,000 euros per year. Sánchez recalled that this decree also includes a 15% increase in non-contributory pensions, which was agreed with Bildu, and the 15% rise in the Minimum Vital Income is maintained.
To questions from the journalists, the president pointed out that the details of the aid of 200 euros will be known with the publication of the measure in the Official State Gazette, but he wanted to emphasize that this measure, together with the increase in the Minimum Vital Income and the 15% increase in non-contributory pensions would be benefiting four million people.
The anti-crisis plan also includes measures that had already been advanced in recent days. One of them is the reduction of VAT on electricity from 10% to 5%, a proposal that the PP had made and that has the skepticism of the experts and the rejection by the European Commission. It is the second reduction that is made in the taxes of the electricity bill, since last year it was lowered from 21%, where the PP Government set it at the time, to 10%.
The rest of the measures that affected the electricity bill will be maintained, such as the extension of the social bond, the reduction in the remuneration of electricity, the reduction of the special tax on electricity or the suspension of the tax on electricity production. Sánchez has defended that in March a 60% cut was approved in the taxes paid for the electricity bill and that with this extension the 80% is reached.
Another known measure is the 15% increase in non-contributory pensions until the end of the year. This measure arises from an agreement between the PSOE and EH Bildu to be able to obtain the abstention of the Basque independence party in the processing of José Luis Escrivá’s public employment pension plans.
Measures that came from the previous plan, approved in March, are also maintained, such as the 15% rise in the Minimum Vital Income, which is now extended until the end of the year, like the rest of the Government’s proposals to try to deal with high inflation . The discount of 20 cents on fuel is also maintained.
The Government also extends until December 31 the limit to the rise in rents. During the last three months, the increase in those rents that had to be updated according to the contracts was limited to 2% and now the measure is extended until the end of the year. The prohibition of justified collective dismissals in price increases for companies that have received public aid is also extended and a limitation on the price of butane cylinders will be included.
The Royal Decree includes two aspects that are not directly linked to the rise in prices caused by the war in Ukraine. Two measures that affect aid to those affected by the eruption of the La Palma volcano a year ago and the super-reduced VAT for masks are extended until December 31. “The pandemic is not over yet,” Sánchez defended.
Díaz: “The measures are a solid tool”
The Government has experienced a few weeks of disagreements between the two partners of the Government on the measures that should be included in this economic plan against inflation. The negotiation rushed the deadlines and continued this Friday. The second vice president, Yolanda Díaz, had marked her profile during this negotiation, flagging the check for families or the tax on electricity companies. In a Twitter thread, she has defended that the new package of measures is “a solid tool to curb the effect of rising prices on the economy of families.”
“The crisis requires a redistributive effort that must also appeal to the large energy companies. We will quickly activate an extraordinary tax that will allow the millionaire profits of these companies to be added to the collective recovery, ”Díaz defended in his account on the social network about the new tax.