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Inflation: Spain eliminates VAT on basic foodstuffs


Bread, milk, cheese, fruit, vegetables and cereals: the Spanish state will not charge VAT on these products for six months. For others, tax rates are reduced.

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Pedro Sánchez, Spanish Prime Minister

Photo: Andreu Dalmau/EPA

In response to the rising cost of living, the Spanish government wants to relieve the population with a new package of measures worth ten billion euros.

Spain's Prime Minister Pedro Sánchez said on Tuesday that the four percent value-added tax on staple foods such as bread, milk, cheese, fruit, vegetables and cereals should be abolished for the next six months.

The VAT rate for oil and pasta should be reduced from ten to five percent.

According to Sánchez, the package of measures also provides for a one-time payment of 200 euros to families with an annual income of a maximum of 27,000 euros.

In addition, reductions in electricity and gas prices are to be extended for six months and the ban on cutting back energy supplies to needy households is to remain in place.

According to Sánchez, rent increases should be capped and forced evictions should remain suspended.

It is also planned that local transport fares will remain reduced in the new year.

A fuel discount of 20 cents per liter, which previously applied to all consumers, will in future only apply to the "most affected areas".

According to Sánchez, these include truck drivers, farmers, shipping companies and fishermen.

Inflation in Spain reduced to 6.8 percent

The new aid package is the Spanish government's sixth program to deal with the "economic and social consequences" of Russia's war of aggression against Ukraine.

In total, Madrid's support in the fight against high food prices and inflation increases to 45 billion euros.

With the efforts so far, the Spanish government has already achieved initial successes.

The inflation rate fell to 6.8 percent in November from 10.8 percent in July, a 38-year high.

However, food prices rose by 15.3 percent in November compared to the same month last year.


Source: spiegel

All business articles on 2022-12-27

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