The new package was announced on Tuesday December 27th at a news conference by Spanish Prime Minister Pedro Sánchez to help fight the effects of rising inflation and the spiralling cost of goods due to the war in Ukraine.
“For six months, we will reduce VAT on all basic foods from 4.0 percent to 0.0 percent,” Sánchez said.
This new measure will come into force on January 1st 2023, meaning that in the new year, we should be paying less for our groceries for the next six months.
The full list of food items that will now have their VAT reduced from 4 to 0 percent are:
Oil and pasta will also be getting cheaper as they will have a VAT reduction from 10 to 5 percent, Sánchez confirmed.
Unfortunately, meat and fish will continue to have 10 percent of value added tax, the two big absentees on the list.
Overall, the VAT slash means that people will now be able to save around five percent when they go shopping for food staples.
There is also concern that supermarkets bosses will benefit from the VAT cut but raise prices to continue making a profit. The following tweet includes a thread with images of all the products that should become cheaper come January 1st (current prices showing), which you can use to compare if they’ve actually dropped in price for consumers.
Guardad este #hilo con precios de alimentos a los que se va a ha quitar o rebajar el IVA el 1 de enero de 2023 para comparar si los supermercados se quedan la rebaja del estado.
Usad #EseIVAesMio para añadir fotos de precios de vuestros supermercados.
Empezamos con Mercadona.
— Dra. Elena Casado Pineda (@Medicilio) December 28, 2022
According to the latest data provided by Spain’s National Statistics Institute (INE), the rising cost of living has affected eight out of ten products, making them 10 percent more expensive on average.
When it comes to food products, all of them are more expensive today than they were a year ago, but it’s the basic items that have increased the most.
Out of the list of food items that will now have reduced VAT, the price of flour and cereals have risen the most. According to the INE, these have risen by 37.6 percent compared with last year.
Milk has increased by 31 percent, eggs by 27.1 percent and olive oil by 25.9 percent.
While the reduction in VAT will not make up for the amount prices surged by, it will still be able to help people in Spain save small amounts where they can.
The plan was announced as part of a raft of new measures including a €200 handout for vulnerable families who earn less than €27,000 per year.
Other ways that the Spanish government has helped people through the cost-of-living crisis include offering free or reduced transport tickets, limiting the amount that landlords can increase the rent by and giving benefits to those struggling to pay their variable mortgages.