As a consequence of the continuous rise in inflation due to the Ukrainian-Russian war conflict, Pedro Sánchez has confirmed the arrival of new measures that will be in force until December 31. This new package has a cost of 9 billion, which together with the current measures will total 15 billion. With this package, the President of the Government expects to bring the Consumer Price Index to 3.5 points by the end of the year.
The budget for these measures is divided into 5.5 billion to guarantee the protection of companies and families and another 3.5 billion for tax cuts. Thus, by the end of 2022, more than one point of the Spanish GDP will have been invested with a total of 15,000 million aimed at protecting companies and families.
The new anti-inflation package
The package includes numerous measures, among which the following actions stand out, as well as the promotion of the use of public transport:
- From September 1, there will be a 50% reduction in the cost of all monthly season tickets and any type of season ticket of state transport companies, for example Renfe, as well as a 30% reduction for season tickets of those transports regulated by the autonomous communities and city councils. This last reduction may be increased up to 50% through own resources.
- A 15% increase in non-contributory disability pensions and retirement pensions. In monthly rate, it means an increase of 60 euros, which at the end of the year will reach a total increase of 360 euros.
- Direct subsidy of 200 euros for unemployed and self-employed with low income, which may be requested as from July. In addition, the maximum cost of butane will be limited until December 31.
- In short, VAT will be reduced from 10% to 5% in the electricity bill and the measures already applied to electricity will continue to be in force, for example, the reduction of the tax on electricity to the minimum, the increase in the discount of the social bonus and the elimination of the tax on the value of production.
- As for fuels, the deduction of 20 cents per liter of fuel will continue until the end of the year.
Postponement of shares effective since March
The measures approved to protect the most vulnerable groups will remain in force until December 31:
- The Minimum Living Income (MMI) subsidies are extended.
- Suspension of power supply remains prohibited.
- The maximum limit on rent increases. Until the date indicated above, it is still prohibited by decree to raise the price of rents above 2%, decoupling the annual update of leases from the CPI. The regulation makes a distinction between small landlords, who will have the option to negotiate increases above 2% with their tenants, and large landlords, who will only be able to increase rents by a maximum of 2%. In the event that small landlords do not reach an agreement with their tenants, they will set the 2% rent increase.
- In companies linked to the Administration, no dismissals may be made for reasons of rising energy costs.
In the same way, the payment of Social Security taxes is also postponed until September, direct subsidies to gas intensive companies are confirmed, aid for drought is maintained and subsidies for the victims of the ‘Cumbre Vieja’ volcano in La Palma are extended.
In an extraordinary manner, last June 26th, Royal Decree-Law 11/2022 was published in the BOE (Official State Gazette). With respect to the lease of real estate, the decree details that “taking into account the recent evolution of the Consumer Price Index, it is necessary to extend the application of the measures of extraordinary limitation of the annual update of the rent of housing lease contracts, in order to avoid in the same contract an excessive impact on persons and households renting housing of the evolution of a reference whose variation is obeying elements of the national and international context that are alien to the field of housing leases”.
After this, the Royal Decree-Law continues “consequently, it is considered necessary to extend until December 31, 2022 the extraordinary limitation of the annual updating of the rent of housing lease contracts (…), so that, in the absence of agreement between the parties, the updating of the rent cannot exceed the result of applying the annual variation of the Competitiveness Guarantee Index, which offers an evolution subject to greater stability, in the annual context”.
This is due to the fact that with the development of the war between Russia and Ukraine, the CPI has reached 7%. Prior to the publication of the first Royal Decree-Law of the March package of measures, the latest inflation figure for February was 7.6%. In the case of this last decree extending the measures until the end of the year, it has taken as a reference the data from April, a month in which the CPI was at 8.3%.
The BOE details that “this justifies the extraordinary and urgent need to adopt measures to avoid a disproportionate increase in the rent of these contracts, by introducing certain factors that respond to the international situation and that are alien to the field of housing leasing”.
In short, the prohibition of the process of evictions and evictions has been postponed for vulnerable dwellings that do not have alternative housing to which they can turn to.