CIP – Confederação Empresarial de Portugal is working to get the government to reduce the VAT on ready-to-eat food, whether frozen or not, from the current 23% to the minimum rate of 6% already set in the state budget for 2024 state. And it is available to sign a pact, such as the tripartite agreement with the Confederation of Farmers and the Association of Distribution Companies on zero VAT. “We are prepared to take the same promise that the 17 percentage point reduction in tax will not serve to increase industry or trade margins, and that it will translate into an equal reduction in the selling price of these items to public.” , guarantees Manuel Tarré, director of CIP which represents associations in the food sector.
The theme is not new, but it is gaining new impetus at a time when inflation remains high and the purchasing power of the Portuguese is being crushed. “The food sector can no longer be treated as a luxury good,” argues the co-chairman of ANCIPA and ALIF, recalling that the agri-food sector is the largest industrial employer in Portugal, with 120,000 direct jobs and 500,000 indirect jobs. In addition, he believes that taxing a pizza, codfish cakes or a pre-cooked meal bought in a supermarket at 23% VAT is “neglecting those who have less financial means”, since the same product bought in a restaurant is taxed at 13%. %.
And what products are we talking about? From groceries such as ready meals, vegetable preserves, tea, coffee and soluble mixes, as well as sauces, vinegar and preserved tomato products. The maximum VAT also applies to meals, such as traditional cod à brás or duck rice, and frozen vegetables, such as puree, asparagus or deep-frying potatoes, as do pasta, meals and refrigerated components. Key items for populations “most exposed to food costs,” such as young students, displaced workers, or the elderly.
The purpose of the measure, the businessmen say, is precisely “to improve the access of the Portuguese to food”, as well as “to increase fiscal justice and converge with the European Union”. CIP compared the VAT applied to different types of food in the main European countries and concluded that “in Portugal the rate is about three times the European average” (see table).
A study commissioned by Deloitte, based on data from Nielsen on how much this market is worth in Portugal, shows that cutting VAT to 6% would reduce tax revenue by about €110 million a year, but that is also the case according to CIP. , would be offset by the rise in consumption. “In fact, it is not a rupture. There would no longer be tax abuse as is the case now, and that disadvantages the Portuguese compared to the whole of Europe,” Manuel Tarré argues.
About the time chosen to resume this claim, the CIP points to the surplus on the accounts of the state, “which has collected more taxes than expected”, while at the same time families live “with many difficulties”. And that is why the VAT reduction is seen as “an important contribution of the Ministry of Finance to the macroeconomic objective of reducing inflation, which remains high, and lowering the real income of the Portuguese”.
However, the CIP leader guarantees that this claim has nothing to do with zero VAT. “The focus is on changing processed products from 23% to 6%. Zero VAT is a transitional measure, that is what the government has always said, and that even has a small impact compared to what we are proposing. A reduction of 17 percentage points would be much more felt in the pocket of the Portuguese,” he argues.
Ilídia Pinto is a journalist for Dinheiro Vivo
Source: DN
