The Government of Spain extends the 0% VAT reduction on basic foodstuffs, to which olive oil will be added

Moncloa Palace, Madrid

The First Vice-President of the Government and Minister for Treasury, María Jesús Montero, together with the Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, and the Minister for Equality, Ana Redondo (Pool Moncloa/Borja Puig de la Bellacasa)

The Council of Ministers has approved a Royal Decree-Law extending several measures to deal with the economic and social consequences of the conflicts in Ukraine and the Middle East, and approving new measures on energy and social taxation.

The First Vice-President of the Government and Minister for Treasury, María Jesús Montero, underlined that these initiatives come in addition to those approved by the Executive since 2020 to support families, businesses and the most vulnerable groups.

Montero added that the Government has implemented a responsible fiscal policy that has led to the largest reduction in energy taxes and VAT in history, resulting in savings for families of €25 billion. Moreover, this policy has been compatible with deficit reduction without cuts and with the fulfilment of budgetary stability and fiscal consolidation commitments.

Family support measures

The regulation approved today includes the extension of the 0% VAT rate until 30 September for basic foodstuffs: milk, bread, flour, fruit, fruit, vegetables, pulses, cereals, tubers, cheese and eggs, to which olive oil will be added. From 1 October to 31 December, VAT on these products will be reduced to 2%. Other seed oils and pasta will be kept at 5% VAT until the end of September, and from October onwards it will be 7.5%.

María Jesús Montero confirmed that olive oil will become part of the basic food basket and will therefore always have a super-reduced VAT rate, which will never exceed 4%.

Cutting off basic supplies prohibited

The Royal Decree-Law maintains the ban on interrupting water, electricity and gas supplies to the most vulnerable groups until 31 December. The vice-president also pointed out that the discounts for the bono social eléctrico will be extended until 30 June 2025, although they will be progressively reduced.

The Tariff of Last Resort (TUR) for gas for homeowners' associations and the energy service companies that meet their requisites will be indefinite.

Modification of Personal Income Tax for recipients of the Minimum Interprofessional Wage

The First Vice-President of the Government and Minister for Treasury, María Jesús Montero, at the press conference after the Council of Ministers | Pool Moncloa/Borja Puig de la Bellacasa

The first vice-president explained that the Personal Income Tax Law is being reformed so that people who earn the Minimum Interprofessional Wage (SMI) are exempt from taxation: "No withholding tax will be deducted from their monthly paychecks and they will not have to pay this tax at a later date".

The amount of gross salary from which personal income tax is payable increases from €15,000 per year to €15,876 per year, the current SMI. Given the progressive nature of the tax, the changes applied will reach incomes of up to €22,000, which will mean that the reduction in personal income tax withholdings will benefit 5.2 million taxpayers, above all wage earners and pensioners with low and medium incomes who, according to Montero, will be able to save €1,358 million.

Montero pointed out that the sum of the tax measures included in the Royal Decree-Law, both VAT and personal income tax, represents a saving of around €3 billion per year for families.

Improving public services and the welfare state

The Royal Decree-Law includes the updating of the payments on account for the autonomous communities and local entities which, according to María Jesús Montero, "will receive record funding from the state". To this effect, the communities will have a total of €154.47 billion at their disposal, €20 billion more than last year, resources that the Government hopes will enable them to strengthen health, education and dependency, according to the vice-president. Local authorities will have €28.56 billion.

Montero stressed that, in the six years of the government of President Pedro Sánchez, the autonomous communities have received almost €250 billion more from the state than in the six years prior to the current government, apart from the €60 billion from the NextGenerationEU funds and the European multiannual financial framework: "All the autonomous communities have improved their funding under this government".

Public employees' salaries increase

The first vice-president reiterated the Government's commitment to public employees, who will see their salaries increased by 2% with retroactive effect from 1 January. The regulation also establishes the possibility of an additional and consolidable increase of 0.5% depending on the evolution of inflation. "We are thereby fully complying with the Framework Agreement for the Administration of the 21st century that we signed with the trade unions, and in fact the total revaluation of employees in the 2022-2024 period will reach up to 9.8% in these years", she remarked.

Aid to the productive fabric

María Jesús Montero pointed out that it is essential for the Government to continue accompanying the transformation of companies by taking advantage of the opportunities generated by the green revolution. To this effect, with the aim of promoting electric mobility, encouraging the purchase of vehicles and the deployment of charging infrastructures, the term of the Electric Mobility Support Programme, MOVES III has been extended until 31 December 2024. The various lines of aid earmarked for electric vehicles amount to €1.5 billion.

Furthermore, to achieve the objective of decarbonisation, the Royal Decree-Law includes a new item of €50 million for the sustainable transformation of fleets of heavy goods and passenger road transport vehicles. The regulation also includes tax incentives for companies and the self-employed to renew their fleets.

The Government is also maintaining aid to the industrial fabric through the extension until 31 December of the support mechanism for the competitiveness of the electro-intensive industry to compensate for its energy costs. The 80% reduction in access tolls to the transmission and distribution networks of this industry is maintained.

The flexibility to modify electricity supply contracts without penalty is likewise extended until the end of the year.

Montero said that a new Social Impact Fund, endowed with €400 million, will be created, the final beneficiaries of which will be companies that develop projects classified as investments with a social or environmental impact.

The first vice-president also announced that the Government is extending all tax benefits for those affected by the eruption of the Cumbre Vieja volcano on the island of La Palma. The unemployment benefits and ERTE are also extended for the companies concerned.

Defending trans and LGTBI people's rights

The Minister for Equality, Ana Redondo, during her speech at the press conference after the Council of Ministers | Foto:Pool Moncloa /Borja Puig de la Bellacasa

The Council of Ministers has agreed to lodge constitutional appeals against two laws passed in 2023 by the Community of Madrid on the grounds that they curtail the rights of trans and LGTBI people recognised in previous regional regulations, and above all in state legislation.

The Minister for Equality, Ana Redondo, has stated that rather than "going further" in defending and guaranteeing the rights of its citizens, laws 17/2023 and 18/2023 of the Community of Madrid "are clearly regressive". Redondo also pointed out that the Government negotiated with the regional government to agree on a solution through a bilateral commission, as established by the Organic Law of the Constitutional Court, but "there has been no progress" in the meetings held.

The appeals are essentially based on four grounds.

First, state law absolutely prohibits the so-called 'conversion therapies', in line with what has been established by the international scientific community and case-law, while the regulation of the Community of Madrid "opens the door to a psychiatric evaluation, a psychological accompaniment which is often a camouflage for aversion therapies, conversion therapies", according to Ana Redondo.

The second grounds of unconstitutionality alleged by the Government is the pathologisation of trans children in regional legislation by forcing them to undergo a process of psychological and psychiatric accompaniment and have a compulsory report drafted about them prior to the start of any transition therapy. The minister pointed out that this is precisely the reason for the appeal of unconstitutionality presented by the Ombudsman, which has already been admitted for processing by the Constitutional Court.

Third, the Executive considers that the Community of Madrid's regulations discriminate against transgender women by stating that they may use shared spaces and facilities as long as they do not undermine the rights and privacy of other women and girls. "We consider it clearly discriminatory," said the head of the Ministry of Equality.

Ana Redondo indicated that the fourth reason for the appeals is the invasion of competences, as the two state laws coming from Madrid exclude LGTBI organisations from the active legitimation to file appeals in the criminal and contentious-administrative spheres as interested parties in the proceedings. This is a matter that falls within the exclusive competence of the state, so these rules contravene the distribution of powers laid down in the Constitution.

According to the minister, the appeal will suspend the effects of the regional laws: "This is an important step forwards that demonstrates the Government of Spain's firm commitment to equal rights, because we are proud of our diversity and of freely expressing ourselves as equals.

National LGTBI Pride Day

The Council of Ministers has approved an institutional declaration on the occasion of 28 June, National LGTBI Pride Day. The Minister for Equality stressed that for the Government "Pride is a source of pride for Spain, a source of democratic pride, a source of pride in our progress as a society".

Ana Redondo stressed that Spain is a world reference in the protection and recognition of the rights of LGTBI people, thanks to legislative advances such as equal marriage, the law on equal treatment and, more recently, the law on the recognition of rights at a comprehensive level for trans and LGTBI people. In addition, to promote the exercise of these rights, resources have been set up such as the Service 028 Rainbow and the equality plans which, within the framework of social dialogue, have been incorporated in companies with more than 50 workers.

Furthermore, the Minister for Equality acknowledged the "essential role" played by activist movements in these advances and pointed out new challenges, such as the fight against inequality suffered by the people who receive various forms of discrimination, and the threats "that this reactionary wave has generated on a national and international level".

Redondo reaffirmed the Executive's commitment to real equality and the defence of the rights of all LGTBI people, inviting the public to take part in "this Pride celebration, which is a celebration of democracy, a celebration in which we recognise ourselves as a diverse, plural and better Spain".

Aid for the electro-intensive industry and researchers

The Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, during her speech at the press conference after the Council of Ministers | Foto:Pool Moncloa /Borja Puig de la Bellacasa

The Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, has announced the approval of several calls for proposals to improve the competitiveness of the electro-intensive industry and the working conditions of the research and scientific community.

In the first case, a €300 million call for proposals has been approved to improve competitiveness and to strengthen capacities and employment in the electro-intensive industrial sectors. As the government spokesperson explained, this aid will support the activity of companies linked to sectors such as paper, aluminium, copper and iron. She explained that since 2019, the Executive has allocated nearly €900 million to offset the costs of CO2 emissions that these companies have to face.

The Council of Ministers has also approved two new calls for proposals totalling more than €80 million to consolidate the professional careers of researchers. According to Alegría, this initiative reflects the Government's "clear commitment" to "science and research in Spain", as it will contribute to retaining talent through new permanent positions in institutions attached to the Spanish science, technology and innovation system.

Paris 2024: subsidy for Olympic and Paralympic Committees

During her speech, the Minister for Sports announced the approval of a grant to the Spanish Olympic Committee and the Spanish Paralympic Committee for the development of the different actions related to the Olympic Games to be held in Paris this year.

According to Alegría, this funding of €7.5 million will enable a "historic" debt to be settled: that Paralympic athletes receive the same amount of money per medal as Olympic athletes. "Equal recognition for the same effort", summarised the minister, who considers this aid to be "a step that is in line with the values that Government defends: inclusion, integration and, above all, equal opportunities". One month before the Games, the spokesperson also expressed the confidence of the Executive in the work of Spanish sportsmen and women: "We are convinced that Spain will give us huge reasons to be joyful".

Other agreements

Pilar Alegría also reported on the approval of an agreement with the Canary Islands for the financing of the Gran Telescopio CANARIAS. Spain has a 66% share in this project, with funding of €42.3 million, while the remaining 44% comes from the Canarian government, with a contribution of €20 million.

In the chapter on appointments, the Council of Ministers has agreed to authorise the civil servants Santiago Ripol and Consuelo Femenía to act as lawyers authorised by the State Attorney General's Office to represent the Kingdom of Spain before the International Court of Justice in the application of the Convention on the Prevention and Punishment of the Crime of Genocide in the Gaza Strip.

Current Affairs

The First Vice-President of the Government and Minister for Treasury, María Jesús Montero, the Minister for Education, Vocational Training and Sports and Government Spokesperson, Pilar Alegría, and the Minister for Equality, Ana Redondo | Foto:Pool Moncloa /Borja Puig de la Bellacasa

Last, Pilar Alegría referred to the economic data released this week: "The Spanish economy grew by 0.8% in the first quarter of this year, one tenth of a percentage point more than announced two months ago, and GDP growth in year-on-year terms accelerated to 2.5%", explained the minister, who considers these figures to be "very good news that confirms the forecasts of all national and international organisations" for Spain.

In this context, the minister also highlighted the latest figure for the pension fund, which currently exceeds €7 billion. "In addition to economic growth, we are adding historic employment figures and consolidating the welfare state. And this, above all, is being achieved with a responsible policy and the fundamental objective of protecting and improving the lives of Spaniards", she concluded.

Non official translation