Spain offers income tax rebate for electric car buyers

MADRID (Reuters) -Spain will reimburse up to 15% of income tax to people who buy an electric vehicle (EV) before the end of the year to encourage cleaner driving, Economy Minister Nadia Calvino said on Tuesday.

The initiative is part of an anti-inflation package worth 8.9 billion euros ($9.7 billion) in which other measures already in place - such as public transport subsidies and value-added tax cuts to basic foods - will be extended until Dec. 31. Those measures had been set to expire on June 30.

"The aim is to consolidate the investments underway in our country for the modernisation of the auto industry" and place Spain at the forefront of Europe's rollout of EVs, Calvino told a news conference.

She added the maximum income tax deduction would be 20,000 euros ($21,900).

Calvino said that total state support - including tax cuts, subsidies and grants - since Russia's invasion of Ukraine in February 2022 amounted to 47 billion euros.

"The macroeconomic situation is favourable and Spain is coping much better than the rest of Europe with the complex international scenario, but the war and the consequent rise in interest rates continues to have its effects ... which is why (the package) will allow us to move calmly and confidently through the second half of the year in a context of uncertainty but with the hope that this war will end as soon as possible," Calvino said.

Prime Minister Pedro Sanchez had hinted at the new measure in an interview late on Monday with radio station Cadena SER and said the policy had already been included in an addendum submitted to the European Commission.

Sanchez has called a snap general election on July 23. It is unclear whether a potential new government led by the conservative People's Party would keep or repeal many of the economic policies implemented by Sanchez's Socialist-led coalition.

($1 = 0.9139 euros)

(Reporting by Emma Pinedo; Writing by David Latona; Editing by Andrei Khalip and Mark Potter)