MADRID: Spain’s government on Friday announced that it will eliminate the value-added tax (VAT) on olive oil, a staple of Spanish cuisine whose price has surged due to a severe drought that has significantly reduced the country’s olive harvest.
From July, Socialist Prime Minister Pedro Sanchez’s government will classify olive oil as a “basic necessity,” exempting it from VAT, the budget ministry said in a statement.
Leftist’s government spokeswoman Pilar Alegria, in a interview with private television station Antena 3, hailed this as “wonderful news for all Spaniards”.
She explained that the measure, to be approved at the weekly cabinet meeting on Tuesday, aims to “ease the burden on Spaniards’ wallets” and “support the olive sector while stimulating consumption of a product that is so important for our country.”
The soaring prices have led to a spike in thefts of olive oil bottles from supermarkets, prompting retailers to use security tags typically reserved for high-value items like alcohol. Sales of cheaper alternatives, such as sunflower seed oil, have also increased.
Basic necessities like bread, fruits, and vegetables usually carry a reduced VAT rate of 4.0 percent, but during periods of high inflation, the rate is reduced to zero.
The government had previously lowered the VAT rate on olive oil from 10 percent to 5.0 percent in 2023 to combat rising food prices, but this measure did not stop the continued rise in olive oil prices.
Spain, which produces nearly half of the world’s olive oil, is one of the leading consumers of the product globally, along with Greece. According to the International Olive Oil Council, each person in Spain consumes nearly 14 liters per year.
