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Spain cuts VAT on basic food amid inflation pain

The Spanish government on Tuesday announced a new package of measures worth around 10 billion euros ($10.6 billion) to reduce living costs, including the removal of value-added taxes on basic food items.

Spanish Prime Minister Pedro Sanchez announced the new package at a year-end news conference.

“Within six months we will reduce VAT on all basic food items from 4.0% to 0.0%,” He referred to a list that included bread, milk, eggs, cheese, fruit and vegetables, and cereal.

VAT on oil and pasta will also be reduced from 10% to 5%, he added.

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Sanchez also announced a one-off payment of 200 euros “Families with an income of less than 27,000 euros” To offset food prices, this will cost around 4.2 million euros.

The new aid package is the sixth package aimed at dealing with the outbreak. “Economic and Social Consequences” News of the Russian invasion of Ukraine.

It raised the total amount released by the Spanish government to 45 billion euros to help those struggling with soaring inflation and runaway food and energy prices.

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The Spanish government on Tuesday announced a new package of measures worth around 10 billion euros ($10.6 billion) to reduce living costs, including the removal of value-added taxes on basic food items. Image via Twitter/Spanish.

loose inflation package

But Sanchez said the 20 cents per liter discount available to all consumers would now be limited to “Most affected industries” Examples include truck drivers, farmers, shipping companies and fishermen.

Spain’s efforts to combat soaring inflation have paid off in recent months, with the figure falling to 6.8% in November from a record 10.8% in July.

But food prices remained high, rising 15.3 percent year-on-year in November.

Also read: UK inflation slows to 10.7% in November

Sanchez also extended discounts on electricity and gas prices for six months and said the moratorium on cutting energy supplies to vulnerable households would continue throughout 2023.

Likewise, the 50 per cent discount on city public transport season pass prices will be extended until the first half of 2023, he said.

© AFP

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