FUEL DISCOUNTS SCRAPPED BUT TAX ON FOODS SLASHED

The new package to alleviate the costs of the war in Ukraine has been announced by the Spanish Government, setting aside another 10 billion euro in aid.

It was announced by the President, Pedro Sánchez, who appeared from Moncloa to take stock of the legislation of the last six months and to present the new package, which the Government has invested following the Russian invasion, now exceeding 45 billion euro, and which has reduced inflation by four points in the last four months, now standing at 6.6%, the lowest inflation in the Eurozone.

Measures include, the ceiling on rents, which will be extended for another six months, a one-off payment for 200 euro for vulnerable households that earn less than 27,000 euro per year and a reduction of IVA on basic foods.

The reduction in public transport will also be maintained, although the aid of 20 cents for each litre of fuel for everyone is withdrawn, except for specialised sectors.

"With these measures we will protect the middle class and companies from the increase in the cost of living, energy and food," said the president, after holding the last Council of Ministers in 2022.

Sánchez has announced the lowering of IVA tax on basic food, which is added to the extension of the reduction of tax on energy. The reduction will be from 4% to 0% on products such as bread, milk, cheese, eggs, fruits or vegetables, legumes and cereals; and from 10% to 5% for oils and pasta. Meat and fish are not included.

The government will also distribute 300 million in direct aid to farmers due to the increase in the cost of fertilizers. With the measures, the Executive expects the price of food to fall. Sánchez has said that it will be required by law that these government efforts be transferred to the reduction of costs for families, although he has not specified how. He added that the payment of 200 euro will be made through a single payment, and will reach 4.2 million homes.

Another of the areas in which emphasis is placed is housing. The decree extends the suspension of evictions and the release of vulnerable homes for six months and extends the 2% ceiling on rent increases until December 31, 2023 and the prohibition of cutting essential supplies.

Likewise, the 15% increase in the minimum vital income and non-contributory pensions will also be maintained.

In the field of transport, the Government has decided to remove the aid of 20 cents per litre of fuel, now that fuel prices have begun to moderate.

This discount, however, will continue "for the most affected sectors", such as transporters, farmers and fishermen. What will also be maintained is the 30% discount for public transport managed by autonomies (metro) or municipalities (buses).

However the government makes it subject to administrations contributing another 20% so that the discount for users will actually be 50%.

As usual, the new decree has generated tensions in the talks between the PSOE and Unidas Podemos. In fact, the second vice president, Yolanda Díaz, has held an early meeting with the president to finalise the details. In this sense, the 'purples' have shown their satisfaction with what was approved.

By contrast, the Partido Popular (PP) has said that the decree "falls very short."