VAT “at zero rate” on essential food items; products still to be decided
The Portuguese government will grant this year a “support” of €140 million to agriculture, it announced on Friday .
The support will be given, in a direct way, to farmers to face the rising costs of production.
According to the presentation at the ministry of finance, the funding will be “to support farmers so that they can cope with the rise in production costs”. The government hopes the “state support” will help towards lowering prices at the consumer level.
Questioned about the details of this measure, finance minister Fernando Medina provided no further information, stating only that “negotiations continue on this matter” with the production sector.
The government will reduce VAT on essential food items, announced the finance minister, putting the rate “at zero” on the basket of essential goods. For now, the government has not yet decided which goods will be included in the VAT reduction.
To implement this VAT measure, the government is trying to reach an agreement with the food production sector and the food distribution sector.
Products “must stay in Portugal”
On Thursday, the chairman of Jerónimo Martins (owner of the Pingo Doce supermarket chain), Pedro Soares dos Santos, called for aid to be given “to production” and not to distribution, with the condition that the products stay in Portugal, stating that last year there was a “very dangerous” shortage of products.
“The shortage meant that we often made the option of having product and not having the capacity to discuss price,” he said at a press conference to present Jerónimo Martins’ 2022 accounts (€590 million, up 27.5% on 2021).
Soares dos Santos also said that the state “was the one that collected the most, benefited the most from inflation and did the least for the people”.
For his part, the director-general of Jerónimo Martins Agro-Food, António Serrano, portrayed the challenges of production in the last year, such as the case of milk.
“We reached the middle of the year and we were faced with the fact that there might not be any milk because costs increased, many producers stopped producing, not only in Portugal, but also in Spain, France and other countries, the reduction of raw materials was evident,” he stated.
At the end of 2021, a litre of milk to the producer was 32 cents and, at the end of 2022, it was 60 cents.
The ministers of the Presidency, Mariana Vieira da Silva, Finance, Fernando Medina, and Social Security, Ana Mendes Godinho, presented yesterday in Lisbon the new package of aid to mitigate the increase in the cost of living.