The Government of Spain gains ratification for the third Royal Decree-Law in response to the impact of the war in Ukraine

News - 2023.1.24

The Lower House of Parliament has ratified Royal Decree-Law 20/2022of 27 December adopting new measures and extending others already approved in 2022 to protect citizens and businesses from the economic and social consequences of the war in Ukraine, as well as to continue the reconstruction of the island of La Palma.

During his speech, the Minister for the Presidency, Relations with the Parliament and Democratic Memory, Félix Bolaños, defended the fact that these are measures that should be unanimously agreed by the Lower House "out of patriotism and common sense". "Out of patriotism, because when there are problems that affect society as a whole, it makes sense for its representatives to unite. And out of common sense, because it has been shown that these measures work," he said.

In this vein, he stressed that this RDL is "another step in the direction established by President Pedro Sánchez since his investiture, just over three years ago: to govern for the people, in order to make Spain a fairer, more cohesive and more modern country". Bolaños stressed the Executive's commitment to "a fair distribution of burdens" and highlighted "the politics of hope for a better and fairer future for our country" as opposed to the politics of fear. The minister also stressed that 2023 will be a good year, in which "Spain will continue to advance economically, socially, in terms of rights and freedoms".

A third social shield is underway

The RDL approved today constitutes a new package of measures to protect citizens from the social and economic impact of the war, in particular the increase in inflation. It also extends the validity of those that are already proving to be effective.

Among the main policies that the minister detailed in his speech were the reduction of VAT on oil and pasta from 10% to 5%, and its removal from foodstuffs such as milk, bread, eggs, cheese, fruit and vegetables, pulses and cereals.

In addition, the 200-euro cheque for people with incomes of less than 27,000 euros a year was also approved, which will benefit 4.2 million households in our country, as well as the extension of the 15% increase in the minimum basic income, the increase of non-contributory pensions and the minimum wage - until its approval in 2023.

The RDL approved today also includes measures aimed at reducing the economic burden that the cost of housing for families, such as the extension of the 2% cap on rent rises throughout 2023; the maintenance, until 30 June, of the suspension of evictions of vulnerable people living in rented accommodation without a housing alternative; and the mandatory extension of rental contracts that end during this period.

Measures to promote public transport and reduce energy prices

It also provides for measures to reduce the price of public transport and thus encourage use, such as the extension of free travel cards for Cercanías, Rodalíes and Media Distancia trains; free bus travel cards for services that are the responsibility of the National Government; and a 30% discount on public transport services that are the responsibility of the Autonomous Regions and local bodies, provided that they agree to an additional 20% rebate. In this way, it will be possible to achieve a 50% price reduction for regular travellers on public transport throughout the country.

To protect citizens and companies from rising energy prices, the RDL extends, until 30 June, the mechanism for compensating the electro-intensive industry and the cap on the price of butane and liquefied gases. It also extends the reduction on the taxes applicable to electricity bills until the end of the year; as well as the prohibition on cutting off the supply of electricity, natural gas and water to vulnerable consumers and the discount on electricity bills through the social voucher.

Measures to protect the most affected economic sectors

To protect the economic sectors most affected by the consequences of the war in Ukraine, the regulation includes the limitation of the increase in motorway tolls to 4% for the whole year, as well as the extension, until 30 June, of the amendment to the formula applied to the revision of road freight transport contracts because the price of fuel has changed.

The discount of 20 cents per litre of fuel is also maintained for certain professional groups in the transport and agricultural sectors. For those who do not benefit from this discount on the price of hydrocarbons, a direct subsidy per type of vehicle (taxis, VTC, goods transport, ambulances or buses) is established, ranging from 300 to 3,690 euros.

In addition, 300 million euros in direct aid has been approved to compensate for the increase in fertiliser prices in the agricultural sector. The exemption from fishing fees is extended for six months and direct aid for the fishing sector of between 1,100 and 300,000 euros per vessel is established.

Support for the reconstruction of La Palma

The RDL also includes the extension of some of the existing measures to support the reconstruction of the island of La Palma, as well as the approval of some new ones.

With the aim of helping to alleviate the economic burdens for citizens and companies, it includes the extension, for six months, of the moratorium on the payment of mortgage and non-mortgage loans, which includes both principal and interest, as well as the exemption from Property Tax and Business Tax for 2022 for people who have not lost their homes but have not yet been able to access them. Likewise, the specific ERTEs to deal with the emergency on the island or the activity termination benefit for self-employed workers are extended until 30 June 2023.

The regulation also introduces a change to expressly recognise the right to access aid from the Ministry of Home Affairs for people who, being usufructuaries of the home in which they resided, lost it as a result of the eruption or suffered damage that needs to be repaired.

Other measures

In addition, the RDL includes other tax measures necessary to address other specific situations, such as the exemption of IBI (Property Tax), the reduction in the IAE (Economic Activities Tax) and the exemption in Personal Income Tax on aid for victims of last summer's forest fires in up to 15 Autonomous Regions. The VAT on surgical masks has been maintained at 4% for the first half of this year, and vaccines and diagnostic tests have been exempted from this tax.

Non official translation

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