Sign in/Register
Looking for the Professionals/Advertiser Login?
By Signing up you are agreeing with our Terms and Privacy Policy.Forgot your password?
Feedback is welcome
A BATTERY of measures to curb the cost of living crisis announced by Spain's government will include windfall taxes on energy companies, an extra levy on bank profits, additional cash benefits for students, and reduced-price or even free public transport.
During the latest State of the Nation Debate, president Pedro Sánchez confirmed two new taxes on industries benefiting from rising living costs will be introduced from January, although they will relate to profits already earned in 2022, making them retroactive, as well as to those earned over the course of 2023, which will be taxed from January 2024.
Electricity providers, gas boards, and petroleum companies which supply either commercially, will be taxed on 'extraordinary' profits – what is known as a 'windfall tax' in countries where this already applies, such as Italy and the UK.
Large banking corporations will also be taxed extra on windfall profits since, Sánchez reasons, these entities are 'already benefiting from interest rate rises', now that the Euribor, or Eurozone interest rate, is back above zero after more than six years in negative figures.
As yet, the exact percentages and applicable income bands these taxes will apply to have not been revealed, nor have the affected companies been named – the biggest corporations in energy and banking will certainly be involved, but those not operating in the top echelons of the market may not yet know how far they will have to plan for extra dues.
But the government has provisionally, and broadly, worked out the key businesses that will be targeted, and estimates that the energy tax will bring in an additional €2 billion a year and the banking profits tax could add €1.5bn to the national economy.
Overall, it means that by the end of 2024, the State will have clawed back an extra €7bn.
Free train tickets for frequent users
Public transport discounts had been on the table for some time, but the State of the Nation Debate saw Sánchez and his cabinet honing the details: From September 1, regular users of the outer suburban train lines, or Cercanías (Rodalies in the Comunidad Valenciana and Catalunya) who buy tickets for set numbers of journeys or for blanket use between specific dates will get them free of charge.
The same will apply for frequent-use tickets for the Media Distancia, or medium-distance 'snail rail' – a basic service which is much slower than the express AVE, but typically far cheaper – since these are the two main commuter links the government manages through the State rail board RENFE.
This will apply until the last day of 2022, when the situation will be reviewed and the 100% bonus may be extended, and will mean those who rely on trains for commuting will not have to pay to get to work.
Extra €100 a month for students on grants
Also, students aged over 16 who are in receipt of grants for college or university – which normally cover, as a minimum, tuition fees, but also, in many cases, help fund living costs whilst during term time – will be given an extra €100 a month from September to December inclusive.
The grant system has been given an overhaul since the socialists (PSOE) and left-wing Podemos began governing in coalition, in a bid to ensure that education beyond compulsory schooling, especially higher education, was made available to those with the desire, ability or both, rather than just those who could afford to pay.
Sánchez says the additional €400 in students' pockets over the winter term was to help prevent anyone having to take the difficult decision to give up their studies because they could no longer afford to continue.
Around a million students in Spain are on, or eligible for, grants, and the ministry of education has budged for just over €2.1bn for these over the coming academic year.
As yet, the €100-a-month bonus has not been confirmed as a long-term fixture – the next State budget has not been negotiated, so the government is unable to commit itself to continuing to pay this extra benefit beyond the end of 2022.
Future 'right to housing' law at draft stage
Another major move in the pipeline relates to housing, and a new law still at the earliest draft stage covering everyone's right to a home.
Although it will be several months before the 'guaranteed housing' legislation comes into effect, a first step affecting the capital will see plans to build 12,000 homes in Madrid unlocked.
These plans had been held up, but work will now go ahead, and 60% of the properties – around 7,200 in total – will be publicly-owned buildings, meaning they will come under some sort of 'official protection' scheme.
Homes known as Vivienda de Protección Oficial (VPO) have always typically meant subsidised purchases in flats or houses built for this purpose, available to first-time buyers aged under 35, but the 'public' properties in Madrid could be a mixture of these and social housing, with fully- or partially-subsidised rent to low-income tenants.
Known as Operation Campamento, the plans for the 12,000 homes in Madrid date back to 2005, but the city council has tried and failed to negotiate starting it in all these years – the land in question is owned by the ministry of defence.
Tentative steps forward were made in 2019, but Pedro Sánchez wants to clear away all barriers to the works' getting under way.
Off-grid electricity for government buildings nationwide
In a bid to reduce reliance on fossil fuel – as part of the fight against climate change, and also to escape oil and gas price volatility and the effects on this by political upheaval elsewhere in the world – Sánchez's government will invest €200 million on solar panels for public-sector buildings across the country.
Plans were already agreed in May to start rolling out a self-generated energy scheme for government buildings, although the expected costs have only just been agreed.
From a financial point of view, this will not, in theory, directly affect living costs, but the eventual saving on mains electricity for the public sector will mean potential for wages to rise for its employees and overheads to come down, translating as less taxpayer funding needed to keep services running, or more resources freed up for vital investment in these.
ONE of the Comunidad Valenciana's biggest employers and a key national transport system has been prevented from closure after the pandemic left it with unprecedented losses.