The zero VAT applied to essential food items should last around six months, and incentives will be gradually withdrawn as inflation slows down, Portuguese Prime Minister Antonio Costa said on Tuesday.
Asked how long this VAT reduction to 0% would last, Costa said that his government has stressed “from the outset” that it is a temporary reduction.
The prime minister spoke to journalists after visiting two hypermarkets in Lisbon’s Telheiras area to mark the entry into force of the government’s measure to reduce VAT from 6% to 0% on a range of basic foodstuffs.
“On Monday, the minister of finance [Fernando Medina] presented the Stability Programme with a forecast of the trend of decelerating inflation over the coming months and years. We will continue to monitor this change and adopt the measures that are necessary at each moment to protect family incomes as much as possible,” he said.
According to the prime minister, “the expectation is that, over the next six months, inflation will fall enough that allows us to remove the incentives.
“If this is not the case, we will have to sit down at the table again and see what we can do,” he added.
Costa summarised the strategy the government followed to combat inflation, as well as the objectives of the agreement that his government signed with producers and distributors to curb the increase in the cost of living.
“Since the war began in Ukraine, inflation, which was already rising from the COVID-19 phase, has worsened significantly. Throughout this year, we have sought to adopt measures aimed at supporting families in their incomes, protecting businesses and helping to control inflation,” he said.
According to Costa, the government’s priority last year was mainly to control price increases in energy, and measures were taken that “had great success”.
“Then we saw a global deceleration of inflation, except for food products, a situation that has various causes,” he said.
Against this backdrop of drastic price rises, he said his government had sat down at the table with retailers and producers to “try to see how together we can control the rise in food prices”.
“We have analysed how to start helping these prices to come down to more affordable levels for Portuguese families,” he said, with Gonçalo Lobo Xavier, secretary-general of the Portuguese Association of Distribution Companies (APED), at his side.
The prime minister pointed out that the state had reduced VAT and granted support for production and retail.
“It is a joint effort that we must continue to make together,” he said in a message directed at the food production and distribution sectors.
(Pedro Morais Fonseca | Lusa.pt)
Source: euractiv.com
