Spanish government ignores recommendations to double taxes on meat products

By Alyssa McMurtry

- Last updated on GMT

Related tags: Meat, Spain

Spanish government ignores recommendations for double tax
Spanish government ignores recommendations for double tax
The Spanish meat industry has said it is relieved by its government’s decision to ignore recommendations to double its sales tax (value added tax – VAT) on meat products, but the meat sector is still unsure how an upcoming tax reform will affect it.

A proposal to increase VAT on certain food products, including meat, from 10% to 21%, was one of tax reform recommendation submitted by a panel of experts, chosen by the Spanish Finance Minister Cristóbal Montoro. Spain plans to overhaul its tax system, starting in 2015, and a report from this panel was expected to provide the cornerstones of the reform. Unsurprisingly, the VAT rise element of their plans alarmed the meat sector – Spain’s fourth-largest industry.

"This increase would have disastrous effects on our sector. It would affect consumption and put the brakes on the emerging economic recovery, the key to which is increasing private consumption,"​ said a communiqué from six of Spain’s largest meat and livestock associations. It stressed: "A new increase in taxes would seriously threaten the viability of the meat sector."

The day after this statement was released, (on 21 March), Montoro announced that there would be no increase on indirect taxes, in other words, no increase on VAT. José M Alvarez, communications officer for the National Association of Spanish Meat Industries (ANICE – Asociacion Nacional de Industrias de la Carne de España), coordinated the statement and said he believed it had an effect on the government’s decision. "That the finance ministry has made this announcement is positive,"​ said Alvarez. "But until the reform is published in the Official Bulletin of the State – the official gazette of the Spanish government – the affected sectors cannot be completely relaxed, because the government could still make a lot of changes that could be damaging."

In Spain, the general VAT rate is already 21%. However, food products such as meat and fish attract reduced rates of 10%. Other food products such as milk and cheese fall under the super-reduced rate of 4%. In the report by the panel of experts, there was no suggestion to increase taxes on anything in the super-reduced category.

"It’s incomprehensible that they would even think about changing the VAT on meat to the general rate, when even gourmet or premium items of other food products, such as cheese or lactose derivatives, would stay super-reduced. This evidently reinforces the discrimination in favour of some products over others,"​ said Alvarez.

Daniel de Miguel, of the Spain’s Meat Export Office (OECE - Oficina de Exportación de la Carne de España) added: "We cannot explain to ourselves why this difference exists. For example, we understand that some cheeses are processed products and are not foods of prime necessity to anyone, but they still get to keep their VAT super-reduced."

Related topics: Meat

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