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Drivers across Spain will soon be paying more at the pump as the government's temporary reduction in fuel VAT approaches its scheduled end date.

 

The measure, which lowered VAT on petrol and diesel from 21% to 10%, was introduced in March as part of a package designed to ease the impact of rising energy prices linked to tensions in the Middle East and disruption to international oil markets.

 

For now, the reduced rate remains in place, but only until Tuesday June 30.

 

Minister for the Economy Carlos Cuerpo has confirmed that the lower VAT rate on fuel will continue throughout June, despite the withdrawal of similar tax reductions on electricity and natural gas on the 1st of this month.

 

The support was introduced as oil prices surged following the conflict between Iran and Israel and concerns over shipping through the Strait of Hormuz, one of the world's most important oil transit routes.

 

According to government estimates, the reduced VAT rate has been saving drivers around 20 to 30 cents per litre compared with what they would otherwise be paying.

 

If the measure expires as planned at the end of June, motorists can expect fuel prices to rise. Analysts have suggested diesel could be the hardest hit, with petrol also becoming noticeably more expensive.

 

While private motorists may soon lose the VAT reduction, the government plans to continue supporting sectors that rely heavily on fuel, including transport companies, farmers and fishermen.

 

Professional diesel users currently benefit from a direct subsidy worth 20 cents per litre, helping to offset rising operating costs. Whether this will be enough to prevent the looming transport strikes remains t be seen.

 

The government has also introduced support for the rail sector, including grants of €15,000 per diesel locomotive, as part of efforts to prevent higher energy costs from feeding through into consumer prices.

 

For now, drivers can continue benefiting from the lower VAT rate, but unless an extension is announced, the current arrangement is due to come to an end at the close of June, so don’t forget to fill up on the 30th.

 

 

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