The government will move forward with reducing VAT to zero on a set of essential food items, yet to be defined. Measure will be in force between April and October. But only if there is agreement from the production and distribution sectors.
The Government will move forward with zero VAT on a basket of foodstuffs considered essential between April and October, seeking to reduce and keep prices stable for six months.
The announcement was made by the Minister of Finance, Fernando Medina, this Friday, March 24th. The measure will cost around 410 million euros.
The goal, according to the minister, "is to provide an answer that translates into a reduction in the price of a basket of goods to be defined and that allows these prices to remain stable over a period of time.
Fernando Medina also said that this measure will be worked on "with everyone", that is, the State and the production and distribution sectors.
According to the head of the Finance portfolio, who spent several minutes of his speech recalling the measures taken over the past year to mitigate the rise in prices and the loss of purchasing power of families, the government is now moving forward with these measures "because the economy has generated results to distribute.
"We can take a new step in responding to the needs of Portuguese families," starting with a response to a key area: rising food prices, said Fernando Medina.
Later, in response to journalists, the minister said that the VAT decrease is dependent on the agreement of the distribution and production sectors.
VAT will go down "only in the framework of the existence of an agreement," the minister said. Medina said he is working with the partners "in a very good spirit".
In this sense, Medina said he expects the negotiations to be concluded "at the beginning of next week," so that the measure will be in effect precisely between April and October.
The governor added that the measure will apply to categories of products and will be based on healthy eating, but said it is still premature to set a price reduction target for this basket.
The minister also said that there will be price monitoring mechanisms to ensure that prices come down to the expected extent.
Production support of 140 million euros
On the other side of the balance, the minister said only that there is an envelope of 140 million euros of "direct support to agricultural producers to cope with the increase in production costs.
However, Fernando Medina did not want to give details about the measure yet, considering that the "negotiations continue".
The idea is that the measure will be in place throughout 2023.
Source: Jornal de Negócios
