The twelve measures deployed by the Government to try to combat inflation, and which were designed to especially protect vulnerable families, are favoring higher incomes more. The debate has been put on the table by the Independent Authority for Fiscal Responsibility (Airef) and it occurs at a time when the economic ministries of the Executive are studying how to extend the shield that tries to alleviate the escalation of prices and that expires on December 31 . This is a problem essentially caused by not focusing the bulk of the aid on the most unprotected households in the face of the crisis.
The reduction of VAT on electricity and gas, the reinforcement of the social bonus, the discount of 20 cents per liter of fuel, the check for 200 euros, the gratuity of short and medium-distance trains… The Government has made an effort to protect middle and low incomes from inflation with an unprecedented deployment of resources. The annual cost of the dozen measures in force is 18,000 million euros, 1.4% of GDP, as explained by Airef in the “Report on the projects and fundamental lines of the budgets” presented this week. The conclusion is that, if the cost of all the measures is divided by the income levels of the Spaniards, it is the upper sections, the richest, who account for 31.8% of the total distribution, while the families located in worse economic situation barely reach 28.2% of the cake.
Airef’s analysis is ambitious. The supervisor has crossed two data sources: the family budget survey of the National Institute of Statistics and the household panel of the tax agency. These figures have been weighted by population. The conclusion that high incomes are getting more out of anti-inflation aid becomes even more evident when analyzing the specific measures one by one.
This is the case of the fuel discount. The result is clear: lowering 20 cents per liter of gasoline or diesel benefits the highest layers of the population to a greater extent because they are the ones who use the private vehicle the most. The most humble use, on average, another type of transport. The expense of this aid is concentrated, therefore, in the highest income brackets, which accumulate 38% of the distribution. The lowest rents add, instead, half, 20% of the cost.
The pattern is repeated in the star measure of the Ministry of Transport to combat inflation. In this way, four out of every ten euros destined to free journeys in Cercanías and Rodalies go to high incomes, compared to 15.3% that is destined to the most needy layers of the population. In the case of medium-distance trains, the difference is even greater: half of the distribution is allocated to the best-positioned families economically, compared to 16.2% that is spent on the most vulnerable. Airef sources argue that these data have an explanation. Aid related to transport is focused on large cities, which is where higher incomes are concentrated. It is around the main population centers, such as Madrid, Barcelona or Valencia, where the highest average salaries are located and, therefore, its citizens are the ones who most use the Cercanías or medium-distance trains. And exactly the same thing happens in the case of aid to reduce VAT on gas: high incomes benefit more than low incomes.
Airef is clear about this situation in its document. The independent authority concludes that “a joint and coordinated strategy is not observed when acting on the most vulnerable households to energy shocks”.
