Spain abolishes VAT for essential foods in an attempt to contain its rise

First modification: 12/27/2022 – 17:34Last modification: 27/12/2022 – 20:30

In his press conference at the end of the year, the president of the left-wing government, the socialist Pedro Sánchez, announced that they will reduce “for 6 months the VAT from 4% to 0% for all essential foods” (bread, milk, cheese, fruits, vegetables, cereals…).

Also, this tax will be reduced “from 10% to 5% for oil and pasta.”

Sánchez also announced “an aid of 200 euros” for “families with incomes of 27,000 euros” or less, about 4.2 million, in order to “compensate for the rise in food prices.”

The socialist leader estimated the cost of this new series of aid “to respond to the economic and social consequences” of the Russian invasion of Ukraine in February at 10,000 million euros, and the total of the six packages approved since then at 45,000 million.

The discount of 20 euro cents per liter of fuel approved for all consumers in previous packages is now limited to “the most affected sectors”, such as carriers, farmers, shipping companies and fishermen, Sánchez listed.

The Sánchez government multiplied aid in recent months to contain inflation, which has skyrocketed throughout Europe, especially due to the war in Ukraine.

In response, inflation has eased in Spain since it reached a record of 10.8% in year-on-year terms in July, since it stood at 6.8% in November.

Despite this, food prices resisted going down, and in November they registered an increase of 15.3% year-on-year.

Insufficient, according to opposition and unions

These announcements come to the point that Spain is entering an electoral year, with municipal elections and in many regions in May, and national legislative elections in November.

The polls are not good for Sánchez and give an advantage to the first opposition party, the conservative Popular Party (PP), led by Alberto Núñez Feijóo.

A PP that this Tuesday criticized that, with his measures, Sánchez “arrives late and falls short of the situation that the Spanish are experiencing,” said his spokesman, Cuca Gamarra.

The government also extended until the end of next year the prohibition of increases of more than 2% in the rent of the habitual residence.

Likewise, the discount of 50% of the price of urban public transport is extended during the first semester, and throughout the year the free subscriptions for suburban and medium-distance trains.

For its part, the Comisiones Obreras union valued the measures “positively”, but criticized that they present “some insufficiency” and that they were decided without “social dialogue, not even consultation on their content,” it said in a statement.