Spanish government axes VAT on basic food to help relieve cost of living crisis

The Spanish government has axed value-added tax on basic foodstuffs in a bid to help with the cost of living crisis.

It is part of a €10 billion package unveiled by Spanish Prime Minister Pedro Sanchez.

“For six months, we will reduce VAT on all basic foods from 4.0 per cent to 0.0 per cent,” he said.

The list of foods now zero-rated includes bread, milk, eggs, cheese, fruit and vegetables, and cereals.

The Madrid government has also slashed the VAT on oil and pasta from 10 per cent to five per cent.

Mr Sanchez also confirmed a one-off payment of €200 euros to families with lower incomes.

There have now been six such packages of measures by the Spanish government since the war in Ukraine erupted at a total cost of €45 billion.

However, Mr Sanchez has rowed back on an earlier measure, and is now limiting a 20 cent discount per litre on fuel to just a number of sectors – including farmers. Previously all consumers had benefited from the reduction.

Food prices in Spain rose by 15.3 per cent year-on-year in November.