Tuesday, July 5

The Government plans to approve this Tuesday the extension of the tax reduction of the electricity bill

The VAT at 10% and the Special Tax at 0.5% will be maintained until April 30, 2022

The temporary suspension of 7% is extended to the production of electricity during the first quarter

The Council of Ministers plans to approve at its meeting this Tuesday the extension of tax rebates of the electricity bill. In an emergency Royal Decree-law, the Government maintains until April 30, 2022 the reduced VAT rate (10%) for contracts that do not exceed 10 kilowatts of power and provided that the average price of the wholesale market in the previous month is greater than 45 euros per megawatt-hour, as well as for all recipients of the social bonus and extends the reduction of the Special Tax on Electricity at 0.5%. In addition, it also extends, although in this case during the first trimester, the temporary suspension of the 7% tax on electricity production, according to the draft royal decree-law to which EL PERIÓDICO DE CATALUNYA has had access.

At the end of June, the Government reduced the VAT on electricity from 21% to 10% until the end of the year and suspended the 7% tax on electricity generation for three months. At that time, the price of electricity on the wholesale market averaged around 90 euros per megawatt-hour. But the exorbitant rise in electricity in summer (with ‘pool’ prices around 150 euros per megawatt-hour) caused a new package of measures in September that included the extension of the suspension of the generation tax and the reduction of the special tax on electricity from 5.11% to 0.5% until December 31.

And despite the fact that the Minister for the Ecological Transition, Teresa Ribera, suggested a week ago the possibility of the Government reducing this reduction, the exorbitant increase in electricity in recent days has ended up re-extending all the measures. This Tuesday, the average price of electricity in the wholesale market will drop 3.67%, its second all-time high, reaching 327.38 euros per megawatt hour. This means exceeding for the sixth consecutive day the level of 300 euros that was broken for the first time a week ago.

Social bonus

In addition, the Royal Decree-law that is expected to be approved this Tuesday, also includes the extension of the discounts of the social bonus (from 40 to 70% for severe vulnerable consumers and from 25% to 60% for vulnerable consumers) of the March 31, 2022 until April 30, 2022. The social bonus is a discount on the invoice that affects the consumers with regulated tariffs (PVPC) subject to certain income and from which they benefit more than 1.2 million households nowadays.

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On the other hand, the Government will also apply measures to make natural gas contracting more flexible until March 31, 2022 “with the aim that companies that are forced to reduce their production do not have to bear additional costs derived from the limitations that current regulations impose on changes in the contracted flow of natural gas” at no cost for consumers or additional charges for the system.

The high prices of natural gas in the international markets, situated at historical maximum levels (they have gone from between 15 and 20 euros on average a year ago to register a price higher than 150 euros), have a direct impact on the production costs of many industrial sectors, in many cases forcing readjustments in the operation of these companies, even reducing their production levels. Therefore, the objective of this measure is limit the impact of this rise in production costs, just as it was done during the state of alarm decreed by the advance of the coronavirus.

Reference-www.elperiodico.com

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