Tuesday, March 5, 2024

Spain extends anti-inflation measures until 2024

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Spain’s leftist government on Wednesday extended until 2024 some measures it had introduced to help households cope with rising costs of living, such as food tax cuts.

Socialist Prime Minister Pedro Sánchez, who was reelected in November, said the measures were aimed at “improving people’s lives” during uncertain times caused by Russia’s invasion of Ukraine and the Israeli-Hamas conflict. Stated.

He said among the measures that will be extended is the abolishment or reduction of value-added tax on certain basic food products such as fruit and vegetables, pasta and cooking oil in the first half of 2024.

The government will also extend free commuter rail service until the end of next year, but added that the reduction in value added tax on electricity and gas prices will begin in stages in the first half of 2024 in response to falling energy prices. .

Sanchez’s government first introduced a series of measures to help households cope with rising prices in 2022, after Russia’s invasion of Ukraine in the same year sent consumer prices soaring.

Spain’s inflation rate hit 10.8% in July 2022, the highest level since 1985, but has since eased. It was 3.2% in November, even though food prices continue to rise at an even faster pace.

Sanchez said the move would cost the national treasury around 2.5 billion euros ($2.8 billion) in 2024, but would not prevent Spain from reducing its debt and budget deficit.

To help pay for these, the government will extend the controversial windfall tax on banks and energy companies, introduced in 2023, by another year. The tax is expected to raise around €3 billion this year, to be paid in both 2024 and 2025.

The Spanish government has pledged to reduce the budget deficit to a level equivalent to 3.0% of gross domestic product (GDP) in 2024, from an expected 3.9% this year, within EU limits.

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