«From this Friday, 1 March, consumers will once again pay 21% VAT on their electricity bill, after some two years of tax cuts to counteract price rises. This will obviously have a negative effect on the electricity bill itself, but it will also have a negative effect on inflation. Thus, this will counteract the current drop in electricity prices», according to the Spanish Consumers’ Association in a press release.
«We are talking about a significant increase in the VAT on electricity from 10% to 21%. This will once again cause payment problems for many families with this 11% increase in the price of electricity».
The government approved the reduction of VAT on electricity as a consequence of the war in Ukraine. That reduction was later extended to 5%, and remained so until January this year, when the government decided to partially raise it again to 10%. Therefore, so far this year, three months, the Treasury has increased the electricity bill by 16%.
Thus, according to the electricity sector, an average annual bill for a typical customer will go from 467 euros to 539 euros per year. In other words, they will pay 72 euros more per year.
Based on this, the Spanish Consumers’ Association believes that now is not the time to remove this type of tax relief, given that our last survey indicated that 86% of consumers consider themselves to be vulnerable at present, given the current economic circumstances,» they say.
«In our view, this will inevitably lead to situations of energy poverty for many consumers who are currently making significant efforts to pay their electricity bills.