The Central Government has enough fiscal margin to continue reducing the public deficit and, in turn, extend the anti-crisis shield for half a year with general tax rebates that lead to a loss of millions in income. With this premise, PSOE and Sumar completed all day yesterday the negotiation of the great omnibus royal decree that is expected to be approved today by the last Council of Ministers of the year.
The Government assumes that it is necessary to continue to protect the most vulnerable sectors of society with a new partial extension of the social shield. The decree will certainly contain a reduction in VAT on basic foods until June 2024. The measure is undoubtedly the most expensive in terms of expenditure, as it is of universal application regardless of income. The Tax Agency has stopped receiving more than 1,500 million between January and November of this year due to this bonus.
Some sources in Sumar also gave yesterday as very likely an extension of the reductions in energy taxes until June. The extension would affect the tax on the value of electricity production, which would have a six-monthly impact of more than 500 million; the special tax on electricity, with a cost also of around 500 million, and the reduction of VAT on electricity and gas, wood and pellets, with an estimated decrease of around 700 million in six months.
In total, extending the tax credits for food and energy for half a year would mean a decrease of around 2,400 million, according to the estimates made by the Treasury in the Budget Plan sent to the European Commission in October.
Yesterday, the coalition government held intense talks to finalize the end-of-year decree that will be presented by President Pedro Sánchez at the annual appearance in December. PSOE and Sumar, in fact, clashed over two measures: the bank tax and free public transport.
With regard to the levies on large energy companies such as Repsol, Iberdrola, Endesa, Naturgy or Cepsa, for several weeks the PSOE has been considering including in the reform a series of deductions for the companies that, in the absence of extraordinary profits due to the stabilization of energy prices, reinvest the profits in projects related to the energy transition. Sumar, for its part, claims to maintain the levy in the terms agreed in the coalition pact “so that banks and energy companies continue to contribute to fiscal justice and the maintenance of the welfare state”.
Another point of friction was the free public transport on which Sánchez announced in his inauguration speech that it would be free for minors, young people and the unemployed. Sumar tried yesterday to open the measure to all of society as a transversal measure.
The Central Government will include in the omnibus decree an extension of the suspension of evictions for vulnerable families who have no residential alternative. The Ministry of Housing advanced the decision on Friday, but EH Bildu announced yesterday a pact with the Executive to extend the measure throughout 2024. The Abertzale coalition highlighted yesterday that this ban and the limit of 3% in the renewal of rental contracts, contemplated in the Housing law, “represent two essential measures in the face of the difficult residential situation experienced by thousands and thousands of families”. The ban on cutting off basic supplies for groups in the same vulnerable situation will also remain in force from January 1.
The Central Government will also extend the discounts of the social electricity voucher, an essential help for the most vulnerable consumers. Currently, it represents a reduction in electricity and gas receipts from the original 25% to 65%. In the case of the severely vulnerable, the reduction has gone from 40% to 80%. The TUR4 regulated tariff for community boilers will also be extended.
The Ministry of Transport is inclined not to maintain the discounts on the fuel consumed by transporters. Until December 31, driving professionals benefit from a discount of 10 cents per liter of fuel. The Executive reminds that transport can already, after a legislative amendment, affect the increase in its costs in the price of its services.