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Date Published: 21/09/2022

ARCHIVED - How much will Spanish households save this winter with new natural gas VAT reduction?

ARCHIVED ARTICLE

From October 1, VAT on natural gas in Spain will drop from 21% to 5%

<span style='color:#780948'>ARCHIVED</span> - How much will Spanish households save this winter with new natural gas VAT reduction?

This September, the Spanish government announced that it would significantly reduce the VAT on gas from 21% to 5% with the aim of easing the impact of the war in Ukraine by lowering household energy bills.

The new pricing will come into force on October 1 and remain in place until at least December this year, President Sánchez announced this week, although the government hasn’t ruled extending the energy cost-saving measures beyond this, as has already been done several times with the 20 cent per litre discount on fuel.

“It is about protecting the sectors most affected by the rise in energy prices derived from the war and cushioning the cost for companies and families,” the president detailed.

The gas price cut, along with the similar measure applied to electricity, should substantially reduce household bills, but how much will the average home really save?

According to the latest data from the Organisation of Consumers and Users (OCU), households could be looking at savings of between 5 and 19 euros per month from October, depending on the tariff they are on and the amount of gas they use.

To give a concrete example, a home which uses gas heating and has a moderate consumption level of 9,000 kWh per year could save around 227 euros annually, the OCU estimates.

However, the group has argued that the next step must be increasing direct taxes on high income earners in order to make up for the deficit that is going to hit the state coffers next month.

With the VAT cut on gas, Minister of Ecological Transition Teresa Ribera has predicted that a total of 10,000 million euros will be saved on consumer bills, more if the reductions are continued into 2023.

“We will be watching how things evolve and in the new budget year, if necessary, it will be extended for next year,” she said.

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