PSOE and Sumar are promoting 0% VAT on oil which could last for 15 days

PSOE and Sumar are promoting 0% VAT on oil which could last for 15 days

The parliamentary groups PSOE and Sumar propose that the abolition of the VAT on olive oil will continue until June 30 of this year at the latest, according to the amendments they presented to the Anti-Crisis Measures Law and what the newspaper EL PERIÓDICO was able to access. The abolition of this tax was one of the issues that were agreed upon last January between the government and the Gont group, as the latter expressed its support for extending the decree on measures to confront the economic and social consequences resulting from the conflicts in Ukraine. and the Middle East, as well as mitigating the effects of drought. This prevented Pedro Sánchez's executive from losing its first major vote in this legislative body in Congress.

Both the Socialists and Socialists Yolanda Díaz included in their proposals that “the VAT rate on olive oil and seeds should be fixed at 0% from the entry into force of the law until June 30, 2024.” The problem is that if Congress does not quickly begin parliamentary processing, a process that typically lasts at least a month and a half, the new regulations will not take effect until early May at the earliest. If the proceedings slow down in the Senate, where the People's Party has a majority – which is more than likely, since the law does not only talk about olive oil, but also includes more sticking points such as inheritance tax or evictions – it will hardly be implemented before June 15, two weeks before the scheduled end of this procedure.

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Negotiating with Junts

Oil was one of the two basic foods in the consumer basket (the other is pasta) on which the value-added tax was reduced to 5%, instead of being completely abolished as was the case with eggs, milk or vegetables, according to the decree approved by the Council of Ministers. The government in mid-2022. This decree and the six decrees that followed it were issued in successive months, to try to contain the inflationary wave resulting from the outbreak of the Ukraine war. The commitment to abolish the tax arose as one of the counterparties so that Juntz would not undermine the decrees that were voted on in Congress on January 10. The post-convergence countries, as they explained in a statement, achieved in these negotiations the full transfer of immigration powers to the general government at an unspecified date, the immediate deployment of fiscal balances (a promise that took effect this week) and the VAT on oil becoming 0%.

The Socialist Workers' Party argues in the amendments it is now presenting to the new law that the package of anti-crisis measures must be eased gradually so that there is no rebound effect on prices and to protect the most vulnerable groups, but it claims that this measure, as the gradual withdrawal is necessary “not to endanger public finances.”

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