2023-07-09 16:47:51
Sunday, July 9, 2023, 4:47 p.m.
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The reduced VAT on food will not be maintained until the end of the year, despite the fact that the Government recently approved it as part of its shock plan against the war, but rather it will end prematurely, already in November. This is at least the view of the Independent Authority for Fiscal Responsibility (Airef), which believes that underlying inflation is likely to fall below 5.5% next September, so that the usual VAT tax rate would be recovered in the food during the last two months of the year, as established in the fine print of the Royal Decree Law of the end of June.
The Government stipulated that these food tax reductions will remain in force until December 31, 2023, provided that the interannual rate of underlying inflation is above 5.5%.
Airef calculates that the Government’s extension of maintaining VAT reductions from 4% to 0% on basic necessities and from 10% to 5% on other basic products will impact four months in the second half of the year with a value estimated at about 520 million, reaching about 1,300 million during the entire year 2023.
This body estimates that the total cost of the response measures to the economic and social consequences of the war in Ukraine and the drought will be 1.1% of GDP in 2023, two tenths more than what was forecast in its previous projections, due to the effect of the extension of approved measures.
Among the extended measures, the bonus per liter of fuel to the transport and agricultural sector stands out, whose extension until the end of the year adds just over 300 million euros of impact on spending in 2023. In addition, almost 400 million additional euros will be due to the extension of direct aid for collective urban and interurban passenger transport, channeled through the autonomous communities and town halls.
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