The VAT reduction slows down prices, by Editorial

The VAT reduction slows down prices, by Editorial

Until the consumer price index for this month of January is known, at the beginning of February, we will not know the specific impact that the reduction in the value added tax (VAT) that the Government has applied to a a large number of staple foods, with the –inexplicable– exception of meat and fish. The first impression, in the opinion of consumers, is that very little has been noticed, with just a few cents off the price of most of the products included in that basket. It is logical that this is the case because the food chain, large distributors and small businesses have not yet had material time to adapt. In some cases, in addition, the computer programs have had to be changed rapidly. Logic indicates that it is necessary to allow a little more time to calibrate the new evolution of prices. But the most important thing, in any case, is that its upward career has stopped, after in one year the increase in food prices has been 15% on average, with much higher percentages even in some basic products such as sugar , oil, cereals or eggs, among others.

What worries the Government and consumer associations, in particular, is that the large distribution companies, intermediaries in the food chain and small businesses do not pass on the VAT reduction in its entirety and that they take advantage of it -in all or in part – for their own benefit. Here the inspection work of public administrations should be used to the full, as well as the controls carried out by consumer associations. That not everything is clean wheat is shown by the fact that a supermarket chain raised the price of certain products just after the Government announced the aforementioned VAT reduction on December 27, as denounced by consumer associations.

The lower tax on food is not very noticeable but for now they stop rising

It must be taken into account that the VAT reduction on the main staple foods has been applied to facilitate access to food for citizens with low and medium incomes, for whom the increase in prices that has been registered represents such a huge increase in their expenses that are unaffordable, especially when coupled with the increase in electricity, fuel and mortgage rates.

The Government itself is aware that the aforementioned reduction in VAT on basic products, despite its high fiscal cost, in excess of six hundred million euros, is not enough to alleviate the situation of the most needy families, since it will only mean a few how many euros less spending per month. For this reason, at the same time, it has maintained the reductions in public transport, as well as in electricity and gas taxes. And it has also established direct aid of 200 euros for the lowest incomes. The question is that this aid, from which 4.2 million citizens will benefit, can be given effectively and fairly.

Everything indicates that the upward pressure on food will continue for quite some time, since the causes that caused it continue, such as the increase in cereals due to the war in Ukraine, and sugar and other products due to low harvests. due to the drought, as well as the higher cost of fertilizers and other phytosanitary products. For this reason, the agricultural organizations also request direct aid for farmers and ranchers as a measure to help lower prices.

The formation of food prices in Spain, in any case, is surrounded by great complexity and an interested obscurantism that benefits the multitude of intermediaries and large chains that participate in it. Greater transparency is needed to detect who abusively benefits from what consumers pay. An alternative to the current scheme is to make a firm commitment to local agriculture and livestock, since it directly favors both ends of the process: producers and consumers.

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