The Spanish Government has announced this Tuesday that it will extend the abolition of VAT on basic necessities for six months due to the persistence of high food inflation, less than a month before the legislative elections. “The suppression of VAT on a basket of basic products such as bread, fruit and vegetables” will be extended “until December 31, 2023”, announced the Socialist Minister of Economy, Nadia Calviño, at the end of the Council of Ministers .
This extension, intended to support the purchasing power of Spaniards, weakened by the economic consequences of the war in Ukraine, will also include a reduction in VAT from 10% to 5% on oil and pasta, Nadia Calviño pointed out. These announcements are part of a new anti-inflationary package that contemplates the extension until the end of the year of the subsidies for public transport and the fuel bonus for transporters and farmers. This discount, currently 10 cents per liter of fuel, will however be reduced to 5 cents from 1 September.
This anti-inflation plan, valued at 3,800 million euros, brings to 47,000 million the total number of measures adopted by the left-wing government of Pedro Sánchez to support the purchasing power of Spaniards in the face of the war in Ukraine, according to Nadia Calviño.
Food inflation of 12%
Announced at the end of 2022, the abolition of VAT on basic food products was originally due to end on June 30. It was extended due to continued economic “uncertainty” stemming from the conflict, the minister added. According to the National Institute of Statistics, inflation has slowed significantly in recent months in Spain, returning to 3.2% at the end of May, after peaking at 10.8% in the summer of 2022. However, it continues being very high for food products (12%).
The government announcements come in the middle of the campaign for the early elections on July 23, called by the president of the socialist government, Pedro Sánchez, after the defeat of the left in the local and regional elections on May 28. The polls show the Socialists at this point widely surpassed by the Popular Party (PP, right), but the latter should need the far-right Vox party to have an absolute majority in Parliament.
Source: BFM TV
