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Spain will continue the VAT reduction on food beyond June
The Government of Spain won’t scrap the tax cuts until food prices come down
The Minister of Economic Affairs Nadia Calvino has confirmed this week that Spain will maintain the VAT reduction on basic foods beyond June 30, until grocery prices reach a “more appropriate” level.
On January 1 the Spanish government scrapped value-added tax entirely on staples like bread, milk, fruit and vegetables and VAT on oils and pastas was slashed from 10% to 5%. The measure was part of a 10 billion euro package to alleviate the inflationary consequences of the war in Ukraine and was initially due to expire at the end of the month.
Despite initial misgivings, the Tax Agency estimates that the VAT cuts have saved shoppers in Spain 245 million euros between January and April this year.
Ms Calvino hasn’t given any indication of how long the current reduction will remain in place, only to say that it will be maintained as long as food prices keep climbing.
The minister pointed out that Spain is now among the countries in Europe with the lowest inflation, having experienced a welcome drop of 5% in the past five months, a downward trend she fully expects will continue.
The government is also analysing extending other measures, such as subsidised tickets for regional and municipal transport, an initiative that many local administrations are against since they are expected to cover 20% of the costs.
What will happen regarding cheap urban transport after June 30, however, is still anyone’s guess.
"From that date, the measure, the economic situation and the forecasts will have to be evaluated in order to make the most appropriate decision," the minister summed up, adding that the ultimate decision will lie with the regional governments and town halls.
In other news: Spain could soon follow France and ban short-haul flights
Image: Pixabay
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