As Spain comes to a stand-still with strike action taking place across the country following the introduction of austerity measures, it has been announced that the cost of electricity is set to rise between 5 and 7 per cent at the beginning of April.
The reason behind the price hikes is the order from the Spanish Supreme Court for the Government to clear an enormous outstanding debt of more than one billion euros. This huge debt is a direct result of policies adopted by the previous government who kept electricity tariffs down and allowed Spanish homes and businesses to run up high utility bills.
The Court has demanded that the €1.035 billion owing to the suppliers be paid. In order to do this the Government has stated that it aims to create a strategy of lower costs and higher revenue to comply with the court order and to ensure that the full cost will not fall on the beleaguered Spanish consumer.
Industry Minister, Jose Manuel Soria has acknowledged that the increase must be implemented to comply with the Supreme Court ruling and stated that the country’s power utilities and the Government itself will shoulder part of the cost of the deficit.
On a brighter note – Señor Cristóbal Montoro, the new Minister for Tax Affairs has confirmed that the government has no plans to increase IVA (VAT) which currently stands at 18 per cent. He stated that unemployment benefit would not be reduced because to cut the spending power of the most vulnerable section of Spanish society would reduce consumption and businesses’ profits. This in turn would lead to more unemployment.
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