Alex Trelinski
SPAIN’S Prime Minister, Pedro Sanchez, has said that he wants to extend VAT reductions on basic foodstuffs beyond the end of June.
The measure introduced at the beginning of last year was aimed at countering rising inflation- especially on food.
It is due to expire on June 30, but speaking to broadcaster TVE on Wednesday, Sanchez said he wants to continue with the discounts but that depended on parliamentary backing.
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“We will have to raise it in the Congress of Deputies. This is a government with a parliamentary minority,” he said.
“Food prices are still high but we have to make that effort, which is a huge effort for the public coffers but a necessary effort for our homes,” Sanchez added.
In January 2023, Spain eliminated VAT from a 4% rate on basic foodstuffs such as bread, cheese, milk, fruits, vegetables and cereals.
VAT on oils and pastes, which had a rate of 10%, was halved to 5%.
The measure cost the public coffers €1.7 billion last year, according to the Tax Agency.
So far this year up to April, the cost has been €442 million.
The general inflation rate has been rising over the last three months with the May figure at 3.6%.
Taking figures from April, food and non-alcoholic beverages went up four tenths of a point year-on-year to 4.7%.
Minister of Finance, Maria Jesus Montero, said a couple of weeks ago that she would wait to find out June’s food inflation rate to decide whether or not to eliminate the VAT discount.
