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The Council of Ministers will extend transport discounts this Tuesday but will drop the VAT reduction on food

The Council of Ministers will extend transport discounts this Tuesday but will drop the VAT reduction on food

The Government will hold this Monday the last Council of Ministers of the year, an extraordinary session marked by the approval of a series of social shield measures. In addition, the extension of the energy tax and the expansion of the so-called ‘anti-takeover shield’ are also planned.

Among the notable social measures, the Government will extend the ban on evictions for vulnerable families for another year and will maintain transport aid for an additional six months after reaching an agreement with Podemos.

However, It has not yet been confirmed whether the ban on cutting basic supplies will be extended such as electricity, water and gas to vulnerable consumers in case of non-payment, valid until the end of this year.

What has not yet been specified is whether the ban on cutting off basic supplies of electricity, water and gas to vulnerable consumers in the event of non-payment, which in principle is in force until the end of this year, is maintained.

Tax on energy companies and diesel taxation

The Government also plans to approve the extension of the energy tax, so that it comes into force before the repeal of the tax approved by the Congress of Deputies with the support of the PP, PNV and Junts.

Like every decree law, The extension of the tax on energy companies will have to be submitted to the Plenary Session of Congress within 30 days for its validation and repeal, and that is where the Government is not guaranteed its support given the refusal of PNV and Junts.

For this reason, the Treasury plans to offer that the decree be processed later as a bill to transform the tax into a permanent tax and thus convince Podemos, which rejects the temporary nature, and the PNV, which does not oppose the tax because its management would correspond to the Basque and Navarrese provincial estates.

It is also likely that The Executive finally approves the increase in diesel taxes to equate it to gasoline, complying with the commitment made with the European Commission.

Extension of the ‘antiopas’ shield

Predictably, the Council of Ministers will also approve on Monday the extension of shielding to strategic companiespopularly known as the ‘antiopas’ shield.

The measure leaves it in the hands of the Government to authorize foreign investments in listed strategic companies in which the aim is to exceed 10% of the capital, as well as in unlisted companies in which the investment exceeds 500 million euros.

According to the latest figures, the anti-opas shield only brought down one operation from its launch in 2020 to 2023. Specifically, the Government only applied the so-called ‘anti-opas’ shield between March 2020 and the end of 2023 to disallow an operation of the 264 that have been subjected to the scrutiny of this regulation.

End of VAT reduction on food

The measure that will decline, if the planned plan is fulfilled, is the reduction of VAT on basic foods, olive oil and pasta and seed oils. Throughout this year, the rate of this tax has been recovering its level and It is expected that on January 1 it will already register its usual percentages.

From October until December 31, the rate on basic foods – bread, eggs, vegetables or fruits – and olive oil is 2%, while the VAT on pasta and seed oils reaches 2%. 7.5%.

With the new year, and given the significant moderation of prices after the inflationary crisis, VAT on basic foods will return to 4% -the super-reduced rate-, while that of pasta and seed oils will once again be at 10% -the reduced rate that applies to food-.

Of course, when rates return to normal, the VAT on olive oil will be 4% – the super-reduced rate – instead of the 10% that it had been bearing in the past.

Discounts on the electric social bonus

What is maintained in 2025, as already approved in the latest package of anti-crisis measures, are the discounts on the social electricity bonus, until June 30 of next year.

From October 1, 2024 to December 31, 2024, the discount for vulnerable consumers will be 57% and for severe vulnerable consumers 72.5%.

Meanwhile, from January 1, 2025 to March 31, 2025, the discount for vulnerable consumers will be 50% and for severely vulnerable consumers 65%; and from April 1, 2025 to June 30, 2025, the discount for vulnerable consumers will be 42.5% and for severely vulnerable consumers 57.5%.

As of July 1, 2025, the discount for vulnerable consumers will be 35% and that for severely vulnerable consumers will be 50%, indefinitely, which represents a reinforcement of the usual level of protection prior to the outbreak of the crisis. energy, located at 25% for the former and 40% for the latter.

Extension of the General State Budgets

The criteria for applying the extension in 2025 of the General State Budget (PGE) for 2023 is another of the issues that the Executive will have to address on Monday.

Before the impossibility of carrying out, for the second consecutive year, new public accountsthe Government must give the ‘green light’ to an agreement that establishes the criteria for applying the extension for 2025 of the General State Budgets (PGE) in force in 2023.

This would comply with the provisions of article 134 of the Spanish Constitution, which determines that, if a new Budget Law has not been approved on January 1, the General Budgets of the previous year – in this case 2023 because in 2024 there was no PGE – until the approval of other public accounts.

Although the process of preparing the next public accounts has already begun with the approval of the spending ceiling and stability objectives by the Council of Ministers – parliamentary processing is still pending – it is necessary to adopt the criteria for extending the 2023 budgets until the approval of the new 2025 public accounts.

Pension revaluation

Also, predictably, the Council of Ministers will approve a Royal Decree-Law that includes the revaluation of the pensions of the Social Security system, Passive Classes and other public benefits by 2025, with a 2.8% increase in contributory pensions.

The average retirement pension in Spain stood at 1,441 euros per month in November according to Social Security data, thus, with the increase of 2.8%, A pensioner earning the average will receive a pension of 1,481.35 in 2025 euros per month, assuming an annual increase of 564.87 euros or 40.3 euros per month in fourteen payments. Likewise, the system’s average pensions will increase by around 500 euros per year in 2025.

The 2.8% revaluation for 2025 will benefit nearly 9.3 million people who receive 10.3 million contributory pensions, in addition to the 720,148 pensions corresponding to the State Passive Classes Regime.

For its part, it is expected that minimum and non-contributory pensions, those received by the “most vulnerable” people, will rise above the average CPI of 2.8%, although the exact figure is still unknown.

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