Daniel Viana
Updated Friday, March 1, 2024-10:32
VAT How much does electricity and gas increase after the Government decree
The
VAT on the electricity bill
rises from 10% to 21% in
March
as a result of the fall in the
price of electricity
.
The law states that if the wholesale market closes the month below 45 euros per megawatt hour, the rate applied to the tax automatically increases, as happened in February.
The
Government does not have any plan or measure to avoid this rebound
.
Storm
Louis
triggered wind generation, and the presence of solar is also being important.
The result is that the average wholesale price of
electricity
for February stood
at 42.43 euros/MWh
in the last week of the month and, although prices rose on Wednesday and Thursday, they did not exceed 45 euros on average. .
The legislation, for its part, is very clear on this point.
The 10% rate will apply "to holders of electricity supply contracts, whose contracted power [fixed power term] is less than or equal to 10 kW, regardless of the supply voltage level and the contracting method, when the arithmetic average price of the daily market corresponding to the last calendar month prior to the last day of the billing period
has exceeded €45/MWh
.
This was stated in the rule with which, initially,
VAT was lowered to 5%
in the midst of
the price crisis
, and it remained so when it was raised to 10% as of January 1 of this year.
This second measure extends until December 31, 2024, so that if the wholesale price falls below that level of 45 euros per megawatt hour in subsequent billing periods, the VAT that will be
applied will once again be 10%.
.
But for now, if the forecasts are met, households will register an average increase of
7.48 euros
compared to the
receipt
from a year ago, that is, in which the 5% rate was applied.
If the same exercise is done with the
January or February receipts
, the increase is 4.56 euros, according to the energy advisory company Selectra.
In annual terms, the increase in VAT up to 21% means about
90 euros more for households
.
But even with these increases,
there is no doubt that the Executive has applied important tax cuts
, especially in indirect taxes.
"The highest in history," according to the Ministry of Finance.
The data handled by María Jesús Montero's department indicate that, since 2021, the total tax cuts reach "
25,000 million for both citizens and companies
. "
On the other hand, where the relief measures have been much less pronounced is in
personal income tax
.
The Executive has applied
discounts for low incomes
, but in no case for medium incomes.
The Treasury's refusal to adapt the income tax to inflation has caused the working middle class, which is the main payer of this tax, to have registered
a double punishment
.
First, because the salary increases they have received have in no case been at the level of inflation.
And second, because in addition to losing purchasing power, they have had to pay more in personal
income tax
.
On natural gas
supplies
, VAT will remain at 10% all year round for biomass fuels and only in the first quarter for conventional gas.
Heat supplies will follow the same pattern, depending on their fossil or renewable origin.