On Friday, in the Assembly of the Republic, the government’s proposal to reduce VAT on a basket of food products, which are considered essential for a healthy diet, to zero, following negotiations on the specialty, which eventually led to the introduction of drinks to the list and plant yogurts.
The bill, which includes more support for production, will cost around 600 million euros. The measure – which will take effect on the 18th and will remain until the end of October – received votes for the PS, Chega and Iniciativa Liberal. The PSD, PCP, BE, PAN and Livre abstained.
It should be remembered that the law – which is still awaiting promulgation by the President of the Republic – began to take shape two weeks ago, when the Finance Minister announced a VAT zero, and after the holder of the Economy portfolio, António Costa Silva, announced ASAE’s strengthening of price inspection.
To ensure that the abolition of VAT does not benefit businesses rather than consumers, the government has signed a pact with APED (Portuguese Association of Distribution Companies) and CAP (Confederation of Portuguese Farmers), a pact for the stabilization and reduction of the prices of food products, with the distribution committed to reducing VAT and not increasing profit margins.
At the same time, a monitoring committee for the agreement was set up, in which various entities are represented that are also part of PARCA (Platform Monitoring Relations in the Agro-Food Chain). At the first meeting of the commission, which took place on Thursday, it was decided that ASAE will be the entity in charge of monitoring price developments, and the Secretary of State for Tourism, Trade and Services, Nuno Fazenda, reported that two days after the entry into force of the “zero VAT”, the next meeting will take place to “fine-tune what can be fine-tuned”.
At the end of the same meeting, APED’s director-general praised the government’s move, highlighting its “very significant impact on families” as “thousands of products will reduce VAT”. On the same occasion, Gonçalo Lobo Xavier, quoted by Lusa, warned of price increases. “The market continues to function regardless of whether this pact is signed or not. On Monday, we received tables from our suppliers showing that there are products that will continue to increase in the coming days,” he said.
According to the head of the large distribution association, the products whose prices will soon be increased are pork and chicken meat and eggs. “It is not a strategy of retailers, but the operation of the market. We have not been able to guarantee, through many support and pacts, the price fixing, which is illegal,” he assured.
CAP Secretary General Luís Mira also stressed that prices should not fall until government support reaches farmers – which is estimated to take four months. “I think there’s a lot of expectations being raised about the size of the discount and the immediacy of the discount. What will be immediate is VAT. As far as production goes, it depends on how quickly support arrives,” he said.
Mónica Costa is a journalist for Dinheiro Vivo
Source: DN
