VAT is once again applied to basic food products, including olive oil, from this Tuesday, first at 2% between October and December, then moving to the super-reduced rate of 4%, as this was the case before the temporary removal of this tax in January 2023. The drop in inflation accompanies the Government in its decision to remove the social shield in the basic food basket.
The government then took the decision to eliminate VAT on the group of food products which already benefited from the reduced rate of 4% to deal with the economic consequences of the war in Ukraine, in particular to contain inflation and help the most vulnerable consumers. vulnerable. It also lowered VAT from 10% to 5% on oils and pastes and, since last July, it has only been removed for olive oil.
From this Tuesday Olive oil will have 2% VAT until the end of the yearhaving been included in the group of essential foods; while Seed oils and pastes will have 7.5% VAT between October and December.
The super reduced type food group also consists of common bread, bread flour, milk of animal origin, cheeses and eggs; as well as fruits, vegetables, legumes and cereals which are natural products.
Since the first VAT reduction in January 2023, the government has temporarily extended this measure, while waiting for the prices of basic foodstuffs to normalize.
In June, the Council of Ministers extended the measure to the rest of the year and reinforced it in the case of olive oil, considered essential for a healthy household diet and essential from a economic.
According to data from the Public Treasury, between January and July The reduction in VAT on food products led to a drop in revenue of 442 million euros. The government has insisted that the gradual return to normal VAT rates responds to the European Commission’s mandate to gradually ease the extraordinary measures that different countries have adopted in recent years against inflation.
According to the inflation rate of the National Institute of Statistics (INE), the prices of food products and non-alcoholic drinks increased by 2.5% last August compared to the same month of 2023, or six tenths of less compared to the annual rate in July. and the lowest figure since October 2021. Overall, inflation was 2.3% in August, five tenths lower than that recorded in June, reflecting a moderating trend.
Food companies have been in favor of the extension of VAT on food products during these months, although it has not been applied to other products such as meat or fish.
Facua-Consumers in Action considers that the measure to reduce VAT on food products which drops this Tuesday was “ineffective and insufficient” for consumersas reported in a press release. This is why they are asking the government for greater control over the increases.
The consumer organization believes that while the rule itself represents “tiny price drops” on products that in many cases have seen huge increases, the “inefficiency” of the tax cut has been larger due to the lack of controls on large production lines. distribution to enforce the ban on increasing margins.
The association rejected this measure, believing that it did not serve “to mitigate the enormous increase in the price of the basket”. In recent months, Facua has carried out a monthly price check and warned that supermarkets may have violated the ban on increasing their profit margins on many products, a practice prohibited by the royal decree-law that established the drop of the tax.
