The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
The Spanish government will cut value-added tax on natural gas to 5% from 21%, in the latest step to blunt the impact on households and businesses of inflation running at its highest level in nearly four decades.
The cut will start in October and last until the end of the year, Sanchez said in an interview with Spanish radio station Cadena Ser. “This will lower the heating bill of our citizens given the surge in prices,†Sanchez said. He didn’t say how much the move will cost his government in lost revenue.
Sanchez’s Socialist-led administration has already spent billions of euros on measures aimed at mitigating the surge in energy prices, which started about a year ago in Spain and picked up pace with the war in Ukraine. Steps announced by his government already include lowering VAT on power and a subsidy on gasoline prices.
Electricity has been one of the main drivers behind Spain’s inflation rate.
, which stood at 10.3% in August.
While a mechanism to cap the price of gas used to generate electricity has made Spanish electricity cheaper than in most of Europe, the country’s economy is still reeling from a surge in costs. Newspaper Expansion reported Thursday that a number of power-intensive companies such as steel-makers including ArcelorMittal and ceramic manufacturers are partially stalling output.
Gas accounts for about a fifth of Spanish power generation. The country is not as dependent as some other European countries on Russian shipments and instead relies more on imports of liquefied natural gas and piped gas from Algeria. Spain is home to about a fourth of Europe’s GNL processing capacity.