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Spanish government abolishes VAT on basic necessities

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Spanish government abolishes VAT on basic necessities
Written by madishthestylebar

Faced with the sharp rise in prices, the Spanish government has just announced the abolition of VAT on foodstuffs such as bread, milk, cheese, fruit, vegetables or cereals.

The Spanish left-wing government announced on Tuesday, December 27 the abolition of VAT on basic necessities in order to compensate for the sharp rise in prices, as well as aid of 200 euros for the most modest families.

These announcements are part of a new series of measures worth 10 billion euros.

0% VAT on “basic necessities”

This brings to 45 billion euros the total of the measures taken this year by the government to help Spaniards cope with the explosion of inflation, said Socialist Prime Minister Pedro Sanchez during his last press conference in the year.

These new measures are centered on food products, whose rise over one year 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 Sanchez. VAT on oil and pasta will drop from 10% to 5%.

Aid of 200 euros for low-income families

The other shock measure adopted Tuesday morning during the last Council of Ministers of the year relates 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 to “compensate for the rise in food prices”.

On the other hand, the rebate of 20 centimes per liter of fuel which all motorists currently benefit from will be reserved, from 1 January, for the “sectors most affected” by inflation, namely transporters, farmers, maritime companies and fishermen,” Mr. 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 exploded throughout Europe.

After peaking at 10.8% in July, its highest level in 38 years, inflation has gradually slowed down to 6.8% in November.

But this decline does not yet affect the food sector, whose prices continue to climb.

“Late and insufficient”

The measures taken during the year by the executive ending on December 31, the government had to decide this week on their possible continuation.

Pedro Sánchez thus announced the extension for six additional months of a VAT rate reduced to 5% on electricity and gas. Similarly, the shutdown of basic services for the most vulnerable who cannot pay their bills will remain prohibited in 2023.

In the field of housing, Pedro Sánchez announced the extension for an additional year of the 2% limit on the increase in rents, normally adjusted annually by an amount equal to that of 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 government coalition.

Likewise, the reduction in urban public transport fares is maintained for the whole of 2023.

End of the fuel discount “for all”

On the other hand, the rebate of 20 centimes per liter of fuel, which all motorists currently benefit from, will be reserved, from 1 January, for the “sectors most affected” by inflation, namely transporters, farmers, seafarers and fishermen,” said Pedro Sanchez.

These measures come in a very tense political climate, less than a year from the next general elections, which will take place no later than December 2023.

They immediately aroused criticism from the main opposition party, the People’s Party (PP, conservative right), which the polls give in the lead if the elections were held today.

“Late and insufficient”, judged the secretary general of the PP, Cuca Gamarra, about this aid.

Pedro Sánchez had anticipated these criticisms by assuring, with the support of a graph, that “Spain has reduced inflation like no other European country”.

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