The Spanish government will reduce the value added tax (VAT) on gas to 5% from 21% from October to reduce the impact of the rise in international prices on electricity bills. , said the President of the Government, Pedro Sánchez, on Thursday.
“It is reasonable that we also try to reduce the heating bill of the citizens of our country,” Sánchez said in an interview with local radio station Cadena SER. The Government seeks to make “an equitable distribution of the costs of the war (in Ukraine)”.
The move will mean a loss of revenue worth some 190 million euros ($190 million) a quarter, Finance Minister María Jesús Montero told reporters on Thursday.
“As a consumer, it seems good to me. If something is noticeable in the final bill, it will be good for people,” said Alfonso Morgado, a video game designer in Madrid.
The Government had reduced the value added tax on electricity twice in the last year, down to 5% as well.
Energy costs have skyrocketed since Russia, which is one of the main providers of natural gas to Europe for heating and power generation, invaded Ukraine in February. Russia calls its actions in Ukraine a “special military operation.”
Spain has agreed with its partners in the European Union to reduce the use of gas by 7%, although so far this year consumption has increased in the country compared to last year.
The summer heat waves have caused an increase in the demand for electricity for refrigeration appliances, while the production of hydropower – an important source of energy in Spain – has decreased due to the lack of water.