By Peter McLaren-Kennedy •
Updated: 02 Jan 2023 • 10:24
Image of a shopping trolley.
Credit: Davizro Photography / Shutterstock.com
The reduction approved by Royal Decree sees VAT on legumes, potatoes and tubers, milk, cheese, eggs, vegetables and fruits, cereals, bread and bread-making flour abolished.
Until now these all attracted VAT at four per cent, but will now remain VAT free for the next six months or until core inflation falls below 5.5 per cent. Currently, the CPI is at 6.9 per cent.
VAT on olive oil and pasta also falls from today going from 10 to five per cent whilst VAT on all other foodstuffs remains unchanged.
According to the news channel La Vanguardia, the average shopping basket is 13 per cent more expensive than this time last year costing the average family of four around €315 extra.
The reductions in VAT, although small, do go some way to reduce the effect of the enormous increases seen on products like olive oil (25 per cent), eggs (27 per cent), milk (30 per cent) and cereals (37 per cent). The government hopes that the broad range of reductions will have a greater impact than the big increase in the cost of individual products.
Legumes, potatoes and tubers, cereals, bread, flour, vegetables and fruits, cheese, eggs and milk
Vegetable oils and pasta
The food industry will, however, be required to absorb the new tax on plastic, which it had asked the government to delay for one year. The new tax rate of €0.45 per kilogram will raise around €690 million according to industry sources. They believe this cost will counter some of the reductions in VAT on foods as it will inevitably push up prices.
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Originally from South Africa, Peter is based on the Costa Blanca and is a web reporter for the Euro Weekly News covering international and Spanish national news.
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