The Government of Spain has implemented a series of measures within its anti-crisis plan to reduce the price of gasoline and diesel. One of the most notable measures is the reduction of VAT from 21% to 10%, which will mean a significant saving for drivers throughout the country.
Taxes on the fuel bill
The price consumers pay when refueling does not depend solely on the geopolitical context, although events like the war in Iran considerably influence it. According to the Fuel Industry Association in Spain, taxes represent the largest percentage of the price of gasoline and diesel, with an average of 44% of what is paid when refueling. To this figure are added the costs of raw material (38%), logistics costs (15%) and wholesale margins (1%).
For example, if a driver refuels with 50 euros of gasoline, about 22 euros correspond to taxes, while 20.8 euros are allocated to the cost of the raw material and 6.4 euros to logistics and commercialization. Only 0.8 euros correspond to the margins of the wholesalers.
Impact of the VAT reduction on the final price
The President of the Government, Pedro Sánchez, has confirmed that the VAT reduction from 21% to 10% for gasoline and diesel will begin to be applied immediately. This change represents an average saving of between 17 and 18 cents per liter of 95 gasoline and diesel, according to estimates from the energy sector based on prices from Friday, March 20. In some cases, this saving could reach up to 30 cents per liter, depending on the type of fuel used.
Although the VAT reduction has a direct impact on the final price paid by consumers, the hydrocarbon tax, which varies according to the type of fuel, remains unchanged. This tax, which is 38 cents per liter in the case of diesel and 47 cents per liter for gasoline, will continue to be a fixed part of the fuel price.
How is the price of fuel distributed?
The fuel price structure is broken down as follows:
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VAT (10%)
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Hydrocarbon tax: fixed (38 cents for diesel and 47 cents for gasoline)
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Cost of raw material
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Logistics and commercialization
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Wholesaler's margin
Before the VAT reduction, taxes represented 44% of the fuel price, while with the measure adopted by the Executive, this proportion will be reduced to 10%, which represents a significant decrease in the final cost for Spanish drivers.
A measure to relieve families and businesses
Pedro Sánchez's Executive, with this and other initiatives, seeks to mitigate the economic impact derived from the rise in fuel prices, which directly affects families and transport in general. Despite the fact that the price of crude oil continues to experience fluctuations due to the international situation, the VAT reduction is an important step in the effort to reduce the burden on Spanish consumers.