Times are tough in many households with soaring prices on numerous necessities. However, the Spanish government has announced that from 1 January, 2023, the value added tax on several goods will be lowered. This will especially help those who already struggle financially following the supply shocks and subsequent price hikes on oil, gas, fertilizer with follow-on effects on prices for food, transportation, power and more.
Tuesday 27 December, the Spanish prime minister announced that from 1 January of 2023, there will be further easing of government taxes to help the many who struggle with rising prices on many essential products. For items like vegetables, fruit, eggs, cheese, milk, cereals and bread the VAT will be scrapped completely (down from an already reduced level of 4%) while on cooking oil and pasta the VAT rate is reduced from 10% to 5%. Together this allows for a less costly but still very nutritious and healthy diet for most people. That’s important because in many countries you will often find the cheapest prices on highly processed foods with little or no nutritional value. Spain chooses a different path and lowers taxes on healthy food items. These measures are temporary and will last only for six months.
Spain’s efforts to reduce the runaway inflation has met with some success with the rate falling from 10.8 percent in July to 6.8 percent in November. But, with food price increases of more than 15% on an annualized basis the new VAT reduction is welcome to many.
The announcement also included an extension of the discounted electricity and gas prices and a continuation of the ban on cutting off gas and electricity to vulnerable households. This ban will now last until the end of 2023. On top of that, a one-time payment of €200 will be paid to households with an income of less than €27,000.
You can read more about the new measures in an article in Barrons here: Spain Axes VAT On Basic Foods To Ease Inflation Pain.
Featured picture: Local market in Palma de Mallorca. Image by Nicole Pankalla, Pixabay
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