Portugal plans to introduce a value-added tax rate of zero for a basket of essential food products as it tries to ease the cost of living crisis.
(Bloomberg) — Portugal plans to introduce a value-added tax rate of zero for a basket of essential food products as it tries to ease the cost of living crisis.
“We are working with the production and distribution sector on a response that translates into a price reduction in a basket of goods that has yet to be determined,” Finance Minister Fernando Medina said at a press conference on Friday. “The solution is to move toward a zero VAT rate on a basket of essential products.”
This measure would be in place from April to October, the government said in a presentation. Portugal currently has three VAT rates: a standard rate of 23%, a rate of 13% and a reduced rate of 6%. The lower rates are applicable to some food products.
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The government also plans to spend €195 million ($210 million) to increase public sector workers’ wages from April and €580 million to help vulnerable families deal with rising prices. Portugal’s average annual inflation rate reached 7.8% in 2022, the highest in 30 years, according to the country’s statistics institute.
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