Fernando medina

Government tackles rising cost of living

0% VAT on essential food products, 1% wage increases for civil servants and €30 monthly subsidy for “vulnerable families”

A new package of measures to tackle Portugal’s rising cost of living was announced today by the Portuguese government.

The package includes three main measures: the removal of VAT (value added tax) from essential food products; a 1% increase in civil servant wages and a raise to their meal subsidy; and a €30 monthly handout for Portugal’s most “vulnerable families.”

The measures were announced at a joint news conference in Lisbon by Finance Minister, Fernando Medina, Presidency Minister, Mariana Vieira da Silva, and Labour, Social Security and Solidarity Minister, Ana Mendes Godinho.

Speaking to reporters today, Medina clarified that the reduction from 6% to 0% VAT on essential food products depends on an agreement with the food production and distribution sector.

The goal is to create “stability and confidence” and, in his words, “end the fear of not knowing if one day you will reach a shelf (and see) a higher price than you found the day before.”

The minister also stressed the importance of reaching an agreement with the sector, saying that otherwise its impact might not be felt by consumers.

“Unilaterally it won’t work, but with an agreement (with the sector) it will,” Medina guaranteed.

Meanwhile, over 742,000 civil servants are due to receive a 1% raise starting in April. Público newspaper has stressed that the measure won’t be applied retroactively, meaning it will only be applied next month. Meal subsidies are also increasing 15.4% to €6 a day.

Regarding the new €30 monthly subsidy for “vulnerable families,” it is expected to be paid in four instalments – April, June, August and November. An additional €15 per month will be added per child.

Also announced was a €140 million aid package for agricultural production.

Explained Medina, the money aims to support agricultural producers so that they can cope with the increase in production costs. As a result, the government expects that it will help lower prices for consumers as well.

By Michael Bruxo

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