Spain will temporarily eliminate the sales tax on olive oil – a key product of the country’s cuisine – to help consumers cope with skyrocketing prices, the government said on Tuesday.
Spain is the world’s leading producer and exporter of olive oil, but its cost for domestic consumers has risen dramatically due to global inflationary pressures and a prolonged drought that decimated supplies, alongside price spikes in energy and other components related to production. Prices have also surged in other Mediterranean countries.
The price of olive oil in Spain has increased by 272% since September 2020, according to the country’s agriculture ministry. The price of one litre of non-branded extra virgin olive oil in a supermarket has risen from €3.45 in February 2021, to now €9.46, according to data from Spanish broadcaster RTVE.
The elimination of the sales tax, which was at 5%, will reduce the price by around €0.50 per litre.
Spaniards use olive oil to cook and to garnish salads, vegetables and other dishes. Last year Spanish households consumed on average 6 litres of olive oil per person, compared to 0.4 litres for international consumers, according to the agriculture ministry. But the rise in prices has made some switch to cheaper cooking oils.
The government had already slashed the sales tax on olive oil from 10% to 5% as part of an anti-inflation package. ALSO READ: Spain extends some anti-inflation measures, including public transport subsidies, in 2024.
No sales tax will be applied to olive oil from July through September, when it will be taxed at 2% until the end of 2024. From then on, it will be taxed at 4% and be considered a basic food stuff.
Spanish Treasury Minister María Jesús Montero said the decision reflects ‘the importance of olive oil in the Mediterranean diet and a healthy lifestyle’.
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