Spain to cut VAT on gas to 5% from October: PM Sanchez

The Spanish government will cut value-added tax (VAT) on gas to 5 per cent (from 21 per cent) from October, to reduce the impact of rising gas prices on household utility bills, Prime Minister Pedro Sanchez said on Thursday.

"So that our citizens' heating bills are lower," Sanchez said in an interview with local radio station Cadena SER. The government seeks to "fairly share the costs and charges of the war [in Ukraine]".

The government has reduced value-added tax on electricity twice over the past year.

Energy costs have skyrocketed since Russia attacked Ukraine in February, as Russia is an important supplier of natural gas to Europe, where it is used almost exclusively for heating and power-generation. Russia calls its actions in Ukraine a "special operation".

Spain has committed with European Union (EU) partners to reduce gas use by 7 per cent, though so far this year, gas consumption in Spain has increased, compared to last year.

Summer heatwaves have also caused a spike in electricity demand (for cooling devices), while also lowering hydro-power production — a significant energy source in Spain — because of the lack of water.

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