A reform of the Value Added Tax (VAT) for , would lower the average deposit of a Spanish utility by about 11 euros. According to expert calculations, the impact of the measure, which is now being studied by the Government, would be equivalent to a reduction in the fuel bill of about 20 cents per liter of fuel. The tank of a medium utility, such as a Volkswagen Golf, admits up to 55 liters of fuel.
The President of the Government, Pedro Sánchez, has announced that the Council of Ministers will approve the response plan for the consequences of the war in Ukraine on March 29, which will include tax cuts, although he has not specified which ones, and has ensured that the supply of food is “guaranteed”. The Executive analyzes including in this measure a reduction in the VAT supported by fuels, which now stands at the general rate of 21%.
“It does not make sense that a country like Spain where in 2021 45% of our energy generation came from renewable sources, which are highly competitive and much cheaper and 15% from gas, that gas price is defining the whole of the price of electricity in our country. It is a bad design at a European level and on March 24 and 25 we have to solve it”, he pointed out. The president has commented that in these two weeks he is going to dedicate himself “in body and soul to traveling through all the European capitals to those countries that have doubts”.
Belgium announced yesterday a reduction in energy taxation to cushion prices. The country thus joins the proposals that are already being carried out in other Member States of the European Union, such as Portugal, Ireland, Poland, Slovenia or France.
The Government of Belgium has agreed a series of tax reductions to lower energy prices, such as reducing VAT on gas and electricity, as well as excise taxes on gasoline and diesel, the Belgian Prime Minister announced on Tuesday, Alexander deCroo. “At the same time, our country continues to put pressure on the EU, mainly to freeze gas prices,” the head of government said on Twitter.
The measures will have a cost of about 1,300 million euros for the State, although around 1,000 million will come from the additional public income that the high energy cost has generated in the form of taxes. This is the second aid package approved by the federal coalition government to limit the impact of rising prices on consumer bills, after a first battery last January.
At all-time highs
. The sharp increase in the price of the raw material, crude oil, has exceeded 100 dollars per barrel, which is used as a base to produce these fuels, is triggering the price of gasoline and diesel, the former reaching more than two euros per liter in many Spanish provinces.
According to the latest data published by the Government -corresponding to February 2022-, the final sale price of gasoline was 1.58 euros per liter. However, if fuels did not have taxes, the price per liter would be 77.4 cents. How do you then get to the 1.51 euros that marked the average price in January?
To the 77.4 cents we would have to add 47.4 cents of special taxes. These taxes are established in a fixed manner by quantity of litres, so that they do not increase the final price when oil (and wholesale gasoline) becomes more expensive, nor do they lower it when it falls. Both gasoline and diesel bear a national Special Tax on Hydrocarbons that came into force on January 1, 2019 -before, the autonomous communities had some competence to reduce or even eliminate the autonomous part of this tax-. Now it is a national tax and consists of a general section and a special section. The general section amounts to 400.69 euros for every 1,000 liters of gasoline and 307 euros for every thousand liters of diesel.
To this we must also add the special section of the Special Tax on Hydrocarbons, which amounts to 72 euros for every 1,000 liters of fuel, both for gasoline and diesel. Finally, to the price resulting from the price of gasoline plus the Special Tax, 21% VAT must be added. In January, this 21% represented 26.2 cents more for each liter of gasoline and 24.1 cents more for each liter of diesel.
The big problem with VAT for the consumer is that, since it is a fixed percentage of the price of fuel, as the price of raw materials rises, that 21% VAT is increasingly higher if it is analyzed in euros, which increases even more. plus the final price of gasoline and diesel.
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