Spanish government to maintain public transport subsidies in 2024 

On Wednesday, Spanish Prime Minister Pedro Sánchez announced that the Spanish government will extend its subsidies and discounts for Spanish public transportation.

Sánchez also announced that during the first trimester of 2024, VAT on basic food products will remain at 0%, while other basic products such as pasta and oil will keep their reduced VAT of 5%.

Taxes on electricity and gas, on the other hand, will increase gradually over the next six months, but only after “the winter period is over,” the PM stressed.

Transport prices

The extension of subsidies and discounts on public transportation means that frequent travelers who use state-owned operator Renfe, the Catalan Rodalies, or the medium-distance operator Avant will be able to continue using the services free of charge.

A 50% discount on public transport fares will also continue in 2024, as in 2023, with 30% being covered by the Spanish government and 20% by the Catalan government. 

Progressive tax hikes on electricity and gas 

The VAT rate on electricity will increase from the current 5% to 10% and will remain at this level throughout 2024. Before the energy crisis, the VAT rate on the electricity bill was 21%.  

The special tax on electricity will be reduced in the first half of the year. In the first quarter it will be 2.5% and in the second quarter it will be 3.8%. Normally the tax is set at 5%. 

The VAT on gas will also increase from 5% to 10% in January. However, it will return to its previous level of 21% in April. 

Fiscal consolidation path 

Sánchez boasted of tax cuts and support measures that will be implemented next year to consolidate public finances. He highlighted the government's efforts to balance finances while creating jobs and maintaining social protection.   

He said that reality had proven wrong the voices that warned a year ago of a recession in Spain. "The Spanish economy has disproved all the prophets of chaos, showing solidity and strength," he said.   

The Spanish PM also mentioned that GDP growth and employment figures have also exceeded analysts' expectations. "The European Commission predicted 0.8% growth in employment in 2023. Today we know that we will grow around 2%," he added.  

Sánchez also expressed pride in the drop in electricity prices, highlighting the direct impact of the measures on the daily lives of citizens. "The figures speak for themselves and show the consistency and social commitment of this government," he said.