The Spanish left-wing government announced on Tuesday, December 27, the abolition of VAT on basic necessities to compensate for the sharp rise in prices, as well as a 200-euro aid for the most modest families.
These announcements are part of a new series of measures worth 10 billion euros.
0% VAT on “basic needs”
This brings to 45,000 million euros the total of the measures adopted this year by the Government to help Spaniards face the explosion of inflation, said the president of the Socialist Government, Pedro Sánchez, during his last press conference of the year.
These new measures focus on food products, whose annual rise reached 15.3% in November.
During the next six months, “VAT will drop from 4% to 0% for all basic necessities”, such as bread, milk, cheese, fruit, vegetables or cereals, added Pedro Sánchez. VAT on oil and pasta will drop from 10% to 5%.
Aid of 200 euros for low-income families
The other shock measure adopted this Tuesday morning during the last Council of Ministers of the year refers to the establishment of “aid of 200 euros” for families whose income is less than or equal to 27,000 euros per year, in order to “compensate the rise in food prices.
On the other hand, the bonus of 20 cents per liter of fuel that all motorists currently benefit from will be reserved, as of January 1, for the “sectors most affected” by inflation, namely transporters, farmers, shipping companies and fishermen. Sanchez said again.
Since the Russian invasion of Ukraine on February 24, the Spanish government has multiplied aid to try to contain inflation, which has skyrocketed throughout Europe.
After peaking at 10.8% in July, its highest level in 38 years, inflation has gradually slowed to 6.8% in November.
But this fall has not yet affected the food sector, whose prices continue to rise.
“Late and insufficient”
The measures taken during the year by the executive that ends on December 31, the government had to decide this week on its possible continuation.
Pedro Sánchez thus announced the extension for an additional six months of a VAT rate reduced to 5% on electricity and gas. Likewise, in 2023 the closure of basic services for the most vulnerable who cannot pay their bills will continue to be prohibited.
In the field of housing, Pedro Sánchez has announced the extension for one more year of the 2% limit on rent increases, normally adjusted annually by an amount equal to inflation. And evictions remain suspended for the next six months.
This was a demand from the radical left party Podemos, a partner of the Socialists in the governing coalition.
Likewise, the reduction in urban public transport fares is maintained for all of 2023.
End of fuel discount “for everyone”
On the other hand, the bonus of 20 cents per liter of fuel, from which all motorists currently benefit, will be reserved, as of January 1, for the “sectors most affected” by inflation, namely carriers, farmers, sailors and fishermen. Pedro Sanchez said.
These measures take place in a very tense political climate, less than a year before the next general elections, which will be held no later than December 2023.
They immediately aroused criticism from the main opposition party, the Popular Party (PP, conservative right), which polls lead if elections were held today.
“Late and insufficient”, judged the general secretary of the PP, Cuca Gamarra, about these aids.
Pedro Sánchez had anticipated these criticisms by assuring, with the support of a graph, that “Spain has reduced inflation like no other European country”.
Source: BFM TV
