Ribera admits that tax cuts “do not solve” the escalation of energy prices

MADRID“Tax cuts do not solve the problem. These are short-term measures, but we need to accelerate major structural changes,” said Teresa Ribera, third vice president and Minister of Ecological Transition, the day after the Spanish government’s announcement to reduce VAT on the electricity bill from 10 to 5%. Ribera’s statements on Thursday show the current dilemma: to try to slow down the escalation of prices, particularly energy, without losing sight of the bottom line, however. In other words, a gas market strained by the international context and, at the same time, a European electricity system that Spain has long considered “failed”.

This reduction in VAT is in addition to the other two tax cuts approved by the Spanish government in September: the reduction of the excise duty on electricity to 0.5% and the suspension of the electricity production tax. . Three measures that will translate into a cost to public coffers of 1.8 billion euros. “It is not possible to think and work only on reducing revenues. This has an impact and empties the capacity of the state,” said Ribera.

In fact, although the measure will go ahead, the Transitional Minister already called it “cosmetic” when the PP had requested it. “The criticism of right-wing parties is that their only answers are to make transfers and not to transform the model,” Ribera said. In Ribera’s eyes, in the long run other measures come into play, such as investing more in renewables or transforming the electricity market.

However, in the short and medium term, the Spanish government is not only working on tax cuts. On the table is also the application of the gas price cap, in force since June 14, as well as a possible surcharge to energy companies so that part of their extraordinary profits help to alleviate the price of the receipt of the gas. light.

In the first case, Ribera lamented the speed in assessing the measure. “It’s been a week in operation. Let everyone relax a little and give room,” the minister reprimanded, insisting that despite the context “the top lowers the price per megawatt hour” of the wholesale market. The fact is that the release of the measure has coincided with an unprecedented heat wave in June that has triggered demand, with production of renewable energy below minimums and an international context marked by pressure from the Russian gas company Gazprom that have strained the gas market. In addition, Ribera has acknowledged that the increase in energy purchases by France means that combined cycle power plants, ie gas, have more weight in the pool and therefore the price increases, as this newspaper explained. However, Ribera has insisted that “the measure works.”

As for the surcharge on electricity (a measure claimed by the minority partner of the Spanish government, Unidas Podemos), Ribera has urged “be careful” with tax increases on electricity to prevent a possible increase can be passed on to consumers . In any case, Ribera has called for more transparency in the sector so that citizens can regain confidence. “Such an important sector for the functioning of the economy cannot be seen as a sector that you cannot rely on,” said Ribera, adding that this only happens in Spain.