July 21, 2024 | 12:35

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Pedro Sánchez announces extension of the VAT reduction on basic foods

Mairenis Gomez

June 12, 2024 | 6:00 pm

This measure, initially scheduled to end on June 30, will be extended due to the continued increase in food prices

The Government has decided to extend the VAT reduction to basic products such as olive oil, bread and milk. This exceptional measure, which was scheduled to end on June 30, will be extended due to the high evolution of food prices. President Pedro Sánchez announced this in an interview on Spanish Television, highlighting the effort necessary for public coffers but vital for homes.

The measure and its impact on homes

On June 30, it was expected that the discounts would stop applying, but economic reality has led the Government to reconsider this date. From January 1, 2023, the 4% VAT was abolished on all basic foodstuffs, including bread and milk, which now do not have any surcharge. In addition, VAT on oil and pasta was reduced from 10% to 5%. This measure was implemented to alleviate the economic consequences derived from the war in Ukraine.

In the words of Pedro Sánchez, "the evolution of food prices is still high and we have to make this enormous effort for the public coffers, but necessary for our homes.". The extension of this reduction seeks to maintain economic relief for families facing the constant increase in food prices.

The economic context and growth forecasts

In the same interview, Pedro Sánchez highlighted that the Bank of Spain has raised economic growth forecasts for this year and the next. This improvement in forecasts is consistent with the projections of the International Monetary Fund (IMF). According to Sánchez, "we are going to be the European economy that grows the most in the coming years."

This optimism in the economic forecasts reinforces the Government's decision to continue with the VAT reduction, providing a respite for consumers while working on the country's economic recovery. The war in Ukraine has had a significant impact on the global economy, and measures like this seek to mitigate these negative effects on the population.

Direct benefits for consumers

The VAT reduction has had a direct impact on the prices of basic products, facilitating access to essential foods for many families. The fact that foods such as bread and milk do not have a surcharge, and that products such as oil and pasta have a VAT reduced, has represented a significant relief in household budgets.

Furthermore, the extension of this measure ensures that the benefits continue for longer, which is crucial in a context where prices remain high. Consumers can thus maintain their purchasing power in a difficult economic environment.

This exceptional measure, which was scheduled to end on June 30

The government effort and its importance

Furthermore, the Government's effort to maintain this reduction is enormous, but Pedro Sánchez insists that it is necessary. Public coffers must bear this burden to ensure that families can cope with the current situation without suffering further. These types of measures are vital to maintain the social and economic stability of the country.

In short, the decision to extend the VAT reduction on basic foods demonstrates the Government's commitment to the well-being of citizens. In times of economic uncertainty, it is essential to implement policies that protect the most vulnerable and ensure fair access to basic resources. The government effort, although large, is an investment in the well-being and stability of the country.

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