ISSN 2330-717X

Spain: PM Sánchez Announces 100-Euro Top-Up Grant And Temporary Taxes On Banks, Big Energy Companies

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In the State of the Nation Debate this week, Spain’s Prime Minister Pedro Sánchez put forward a series of measures to protect the middle and working classes from inflation, to ensure a fair distribution of the burdens of war and to continue modernising Spain.

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In his first speech, Sánchez stressed before the plenary session of the Lower House of Parliament that he is “fully aware” of the daily difficulties that the majority of citizens are suffering as a result of the escalation of prices, a consequence of the unfolding of the pandemic and the war in Ukraine that has made energy and basic foodstuffs, in particular, more expensive.

Inflation, Sánchez explained, is now the main challenge facing Spain and most of the world’s economies. As for the outlook for the coming months, Sánchez pointed out that it will depend on how long the war goes on for, the performance of economies such as China’s, the supply of gas from Russia to Europe, and the effectiveness of the measures adopted to avoid an inflationary spiral.

Sánchez called for not bowing to catastrophism because although the Spanish economy is going to grow less than expected, it is nonetheless creating quality employment, the most strategic sectors are already working almost at full capacity, European funds are having a real impact and the measures adopted, such as the cap on gas, will help to cool prices.

Sánchez has assured that the government will go “all out” to defend the social majority, the middle and working classes, so that the consequences of the war are distributed fairly and equitably and do not fall on the most vulnerable. At the same time, it will continue to modernise the country: “We are building the future, we are looking forward and we are not going to stop”.

New measures in favour of the social majority

In addition to the measures initially contained in the National Response Plan to the consequences of the war in Ukraine, which were extended and expanded in the Royal Decree-Law whose validation in the Lower House of Parliament is to be voted on this week -fuel subsidies, limiting rent increases, discounts on electricity taxes that represent a total reduction of 80% of the bill, and the 200-euro subsidy for vulnerable people- Sánchez announced a 100% subsidy for all multi-journey passes for public service trains on Cercanías, Rodalies and medium-distance trains operated by Renfe. To this effect, multi-journey passes will be free of charge from 1 September to 31 December. This initiative is in addition to the 30% reduction for the rest of urban and metropolitan transport passes, which can be supplemented by the regional governments up to 50% or 60%.

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Second, a tax on large electricity, gas and oil companies will be introduced. Exceptional and temporary in nature, it will tax windfall profits made in 2022 and 2023. Annual revenue is estimated at 2 billion euros per year.

A tax on banks will also be approved on an exceptional and temporary basis. It will be applicable for two years, over the financial years 2022-2023, and it is estimated that it will raise around 1.5 billion euros per year.

The government will also continue to encourage the social partners to reach a pact on dividends and incomes to contain price rises and share the costs and benefits of the current crisis more fairly. In this regard, Sánchez thanked the representatives of civil society, social agents, collectives, NGOs and sectoral organisations for their willingness to reach agreements, which has made it possible to adopt measures and promote important legislation, including the labour reform.

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