The Treasury will increase the diesel tax in Spain with a decree-law on December 23rd
Taxation
The price of a liter will increase by 11.33 cents, although professional diesel will be excluded
Service station with two vehicles refueling diesel and gasoline
The Ministry of Finance is finalizing an increase in the special hydrocarbon tax for automotive diesel. The goal of María Jesús Montero's department is to approve a royal decree-law in the last Council of Ministers of the year, on the 23rd, with this measure and then validate it in the Congress of Deputies throughout January. The Government expects to have the necessary support to overcome the parliamentary process.
The price per liter of diesel would increase by 9.36 cents without taxes and around 11.30 cents with VAT, according to market sources. This increase would be directly passed on to the consumer, resulting in the equalization of diesel prices with gasoline. The ultimate goal of this measure is to penalize the use of diesel and achieve a “moderation of greenhouse gas emissions.” Treasury sources confirm that professional diesel, used by road transporters, passengers, or taxi drivers, would be exempt from the new tax rate to “maintain competitiveness in sectors with high consumption.”
The increase will come into effect on April 1st and public coffers could receive more than 1.200 million per year
The Treasury already tried to approve, during the process of the tax reform last November, the increase of diesel taxes. The initial amendment was agreed upon by the PSOE and Junts. It stated that “tax rates on hydrocarbons for diesel for vehicles will be increased to match those of the most consumed gasoline (unleaded gasoline with an octane rating below 98).” This would mean applying a general rate of 400.69 euros per 1,000 liters of diesel and a special rate of 72 euros per 1,000 liters. The ministry's intention is to replicate this initiative in the decree.
The Treasury estimates that the increase in diesel fuel would generate an additional revenue of between 1,200 and 1,400 million per year. The modification of the hydrocarbons tax is planned, in principle, to come into effect on April 1, 2025. That is to say, it will not be immediately applicable to avoid an impact on the so-called January slope, according to sources close to the Treasury, but it will be in effect for private drivers traveling during the upcoming Easter week.
In the Treasury Committee where the tax reform was voted on, the parliamentary groups present supported the increase in diesel prices. Both left-wing and right-wing parties, as well as all of the PSOE's coalition partners, voted in favor. The amendment made it to the lower house plenary, but it was rejected there due to Podemos voting against it. However, Podemos wasn't opposed to the measure itself, but rather because the socialists included the amendment in a package that also allowed SOCIMIs to participate in the expansion of social housing in Spain. Now, Podemos has demanded that the tax on major energy companies be maintained in order to support the diesel price hike.
Treasury is also considering including a possible reduction in the tax if the price of Brent crude oil skyrockets, as it already did in the amendment that failed in the tax reform. The goal is to provide a tax relief to consumers in these extreme cases that can cause global uncertainty.