Prime Minister Pedro Sánchez, has announced that he will lower IVA on gas bill from the current 21% to 5% at least until the end of the year, in view of the increase of gas prices in international markets, which have set a new record high in August.

Sánchez made the announcement in a radio interview five days after the debate he was going to hold with the leader of the PP, Alberto Núñez Feijoo, in an energy face-to-face meeting in the Senate. The IVA reduction was one of the proposals put forward by the PP this week in the face of that parliamentary meeting.

The increasing price, which has exceeded 300 euros/mwh this August, has led the Government to make this decision prior to the start of a winter in which gas bills may suffer an unprecedented rise. Russia’s decision to cut the gas pipelines with Germany, France, and other countries, has revolutionized the gas market which, in turn, has also boosted the electricity price.

This reduction now mirrors that previously made to electricity last spring from 10% to 5%. It is the minimum tax allowed by the European Commission.