Spain will extend a series of tax cuts brought in to provide relief to consumers hit by sky-high energy bills until May 2022, government spokesperson Isabel Rodriguez said on Tuesday.
Extending the package of cuts, which were introduced in June and were due to expire at the end of the year, will have an impact of some 2 billion euros ($2.26 billion) over the first months of next year, Rodriguez told reporters after the weekly cabinet meeting.
Strong demand for power as economies emerge from the pandemic, plus infrastructure outages and low stocks have driven gas and power prices to record highs across Europe and they are unlikely to fall before the end of winter.
"The prospects for wholesale electricity prices - which will reach a new record tomorrow - are not particularly promising," Energy Minister Teresa Ribera said during the same news conference.
"It's fundamental to maintain the reductions and suspensions of some taxes that are reflected in our electricity bills."
VAT on energy bills will remain at 10%, down from 21%, while a special tax on electricity will remain at 0.5% until April 30, Ribera said.
A 7% tax on electricity generation, which is ultimately passed on to consumers, will remain suspended until the end of March.