Spain’s left-wing government announced on Friday that it will abolish the value-added tax on olive oil, a staple of Spanish cuisine that has soared due to a severe drought that has caused the country’s olive harvest to plummet.
The government of Socialist Prime Minister Pedro Sanchez will from July “permanently” include olive oil in the list of “basic necessities” exempt from the tax, the budget ministry said in a statement.
This is “great news for all Spaniards,” government spokeswoman Pilar Alegria said during an interview with private broadcaster Antena 3.
The measure, which will be approved at a weekly cabinet meeting on Tuesday, will “lighten the burden on the wallets of Spaniards” as well as “support the olive industry and stimulate the consumption of a product that is so important to our country,” he added. .
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Supermarkets have reported a surge in thefts of bottles of olive oil after their price has soared, prompting some retailers to put on them the security labels normally found on expensive items such as alcohol, while sales of cheaper alternatives such as sunflower oil have increased.
Essentials such as bread, fruit and vegetables usually have a reduced VAT rate of 4.0%, but in times of high inflation, such as today, the rate drops to zero.
The government has already cut the VAT rate on olive oil to 5.0% from 10% in 2023 to help combat rising food prices, but that hasn’t stopped its price from continuing to rise.
Spain, which supplies almost half of the world’s olive oil, is along with Greece the world’s biggest consumer of the product, with each person consuming nearly 14 liters per year, according to the International Olive Oil Council.
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The cost of olive oil in Spain in May was 63 percent higher than the same month last year and three times more expensive than in January 2021.
The sharp rise is due to a drop in production in Spain during the 2022-23 and 2023-24 seasons as a result of a series of extreme heat waves and a lack of rainfall in the country, especially in the southern region of Andalusia. main olive producing area.
During the 2022-23 season, Spain produced 660,000 tonnes of olives, up from 1.48 million tonnes in the 2021-2022 season. The Ministry of Agriculture predicts that production will not exceed 850,000 tons in 2023-2024.
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Source: AFP